Microsoft (MSFT)-backed OpenAI has found evidence that Chinese startup DeepSeek used its proprietary AI models to train its own competing system, the Financial Times reported. According to OpenAI, the startup appears to have used a technique known as “distillation,” where outputs from one AI model are used to train another. This method allows for similar performance at a significantly lower cost.
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Although distillation is common in AI, the problem arises when a company uses another’s outputs to create a rival product. One person close to OpenAI said, “The issue is when you [take it out of the platform and] are doing it to create your own model for your own purposes.”
DeepSeek’s V3 AI Model Shakes Up the Market
DeepSeek’s release of its R1 reasoning model has caused a stir in the AI world. The company claimed that it used Nvidia’s (NVDA) H800 chips and needed less than $6 million in computing power to run the model.
The fears that the demand for expensive AI hardware might decrease created panic in the market, with tech stocks such as Nvidia and ARM (ARM), dropping big time. However, NVDA shares gained about 9% yesterday, but the initial drop showed the concerns investors had about the competition from low-cost models like DeepSeek’s.
What Are the Best AI Stocks to Buy?
The ongoing AI race highlights the need for clearer regulations and better intellectual property protections. For now, all eyes are on AI stocks. So, for investors looking to dive into the growing artificial intelligence sector, selecting the right stocks can be challenging.
To simplify the process, we’ve compiled a list of AI stocks that analysts are bullish about using the TipRanks Stocks Comparison tool.
