Did AI just have a “Sputnik moment”?

That’s what some investors, after the little known Chinese startup DeepSeek released a chatbot that experts say holds its own against industry leaders, like OpenAI and Google, despite being made with less money and computing power.

Buzz around DeepSeek built into a wave of concern that hammered tech stocks on Monday. It wiped almost $600bn from chipmaker Nvidia’s market value.

Not iterative or evolutionary, but pathbreaking

“This is, I think, something that has really shown to some degree how much the U.S. was living in a bubble,” said Antonia Hmaidi, a senior analyst at the Mercator Institute for China Studies in Berlin.

“OpenAI and companies like OpenAI had really bet on scaling being sort of infinite, and needing to buy more and more and more chips for performance to improve.”

What DeepSeek showed, she said, is that there are different paths.

The company says it used a little more than 2,000 Nvidia H800 GPUs to train the bot, and it did so in a matter of weeks for $5.6 million. Others have reportedly deployed 10,000 or more GPUs, and spent upwards of $100 million or more to get similar results.

Marina Zhang, a scholar with University of Technology Sydney, said DeepSeek has also demonstrated a new kind of innovation for China – not iterative or evolutionary, but pathbreaking.

“They’re not really following existing models,” she said. “It’s basically based on algorithm optimization, using software to break through the constraints of not enough computational power.”

Have the U.S. chip export controls failed?

Those constraints were imposed on China by the United States. In 2022, the Biden Administration banned the export of cutting edge microchips to China, arguing that they could be used to enhance the Chinese military.

Zhang said DeepSeek has shown that the chip blockade has not been successful so far. Beijing has been doubling down on a self-reliance drive in tech for several years, pouring money into chip development and other sectors, including AI.

Others argue it’s too early to say the chip export controls have failed.

Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies in Washington, said DeepSeek could have acquired all its chips before the effect of the controls started to be felt.

In a widely reported 2023 interview, DeepSeek founder Liang Wenfeng said the company had stockpiled some 10,000 Nvidia A100 GPUs – a variety that was put on the U.S. export control list. Experts think those may have been deployed in earlier versions of DeepSeek’s model.

After the chip blockade started, Nvidia developed a workaround, creating the slightly less powerful H800 GPU, which was legal to sell to China for a time.

“We are currently living through the era of the lagging impact of the Biden administration’s misfire in that first batch of AI export controls,” said Allen.

DeepSeek had a window in which it was able to buy H800s – before the administration eventually banned the sale of them to China, too.

“DeepSeek has discovered some architectural innovations, some algorithmic innovations that sort of increase the number of IQ points, the amount of intelligence, that a given AI model can get from a given quantity of computational resources,” he said.

But AI development requires computing power, and the number of advanced GPUs that DeepSeek, or any other Chinese company, can access is limited by the export controls, he said. That will eventually bite.

Allen says it means the U.S. has an edge: access to advanced chips without restrictions.

“We can copy China’s advantages. They cannot copy our advantages. At least not any time soon,” he said.

In terms of the hype around DeepSeek developing its near-cutting edge model on the cheap, Allen said the cost was undoubtedly far north of the reported $5.6 million. He likened it to the development of a drug.

“The cost of developing a new medication is not just the cost of the clinical trial that worked,” he said. “It’s the cost of all the clinical trials that didn’t work. And it’s the same with this AI model training run. DeepSeek has published how much it cost them for that final successful training run.”

It’s not known how much the company spent to get to that point, he said.

Hmaidi says DeepSeek is a “very legitimate triumph of Chinese engineering”. But she says it’s not yet the threat that many are making it out to be.

“I currently don’t see how you get a significantly better model with their current pipeline – without more compute,” she said.

“Personally, I don’t think it’s a threat to America’s AI prowess at this point.”

This week’s rainstorm brought some much needed moisture to Southern California without the mudslides some feared.

But did it help reduce the fire danger that fueled this month’s unprecedented firestorm?

Fire conditions

Forecasters say the amount of rainfall isn’t quite enough to keep Los Angeles’ fire season from dragging into February. It would take 2 to 4 inches of rain to comfortably consider the wildfire season over, said Ryan Kittell, a National Weather Service meteorologist in Oxnard. This storm dropped, generally, half an inch to 1.5 inches across the L.A. Basin.

“It’s not quite where we’d be comfortable to say we’d be good for the season, but certainly providing relief for the next couple weeks,” he said.

Amid the wet weather, containment grew on all of Southern California’s wildfires.

The Palisades, Eaton and Hughes fires in L.A. County were 95%, 99% and 98% contained, respectively, as of Tuesday morning, according to the California Department of Forestry and Fire Protection. Containment of the Border 2 fire in San Diego County was listed at 74%.

What SoCal got

Rainfall in Los Angeles County peaked in Porter Ranch, with its three-day rain total hitting 1.62 inches as of 10 a.m. Monday, according to the National Weather Service. Sepulveda Canyon wasn’t far behind with 1.45 inches, and Santa Monica Pier got 1.38 inches. Some areas, however, didn’t top half an inch: Agoura Hills and Castaic saw a third of an inch; Alhambra got 0.49 of an inch.

Snowfall in the mountains accumulated to more than a foot in some of the highest elevations, including Mountain High in Wrightwood and at Arrowbear Lake. Other peaks saw 1 to 10 inches: Mt. Wilson recorded 10 inches, Frazier Park got 2 to 4 inches and Mt. Baldy got 5 to 10 inches, according to the National Weather Service.

Here are some three-day rain totals, from the weather service:

• Porter Ranch —1.62 inches
• Santa Monica Pier — 1.38 inches
• Northridge — 1.36 inches
• Calabasas — 1.12 inches
• Canoga Park — 1.10 inches
• La Verne — 1.10 inches
• Culver City — 1.06 inches
• Chatsworth Reservoir —1.05 inches
• Beverly Hills — 1.02 inches
• Hansen Dam — 1.00 inches
• Bel-Air — 0.93 of an inch
• Hollywood Reservoir — 0.87 of an inch
• Newhall — 0.79 of an inch
• Claremont — 0.72 of an inch
• San Rafael Hills — 0.72 of an inch
• Santa Fe Dam — 0.61 of an inch
• Eagle Rock Reservoir — 0.59 of an inch
• Whittier — 0.59 of an inch
• La Cañada Flintridge — 0.57 of an inch
• Sierra Madre — 0.54 of an inch
• Alhambra — 0.49 of an inch
• Agoura Hills — 0.33 of an inch
• Leo Carrillo State Beach — 0.31 of an inch
• Castaic — 0.30 of an inch

‘Dodged a bullet’

Although the much-anticipated rainfall had many fire-weary Angelenos hopeful, forecasters had also been worried that the system would create thunderstorms or strong storm cells that would inundate the regions’ fresh burn scars, wreaking more havoc on the disaster-fatigued region. But luckily, Kittell said, the heaviest rain missed those areas.

“This was a largely beneficial rain. … I think we dodged a bullet,” he said. “It helped with the firefights and definitely gives us a break from fire weather.”

Some areas saw significant downpours, with heavy rain falling in a short amount of time, causing some minor flooding and road closures from mud and debris, especially in the Santa Monica Mountains. But the worst-case scenario didn’t play out, Kittell said.

Forecasts show the next few days relatively dry, but there are some chances for rain this weekend or next week, which could continue to ease the fire threat if it materializes, Kittell said.

There are “a few signals for one or two rain events,” he said.