On Monday, U.S. markets were shaken by DeepSeek, a relatively new Chinese AI firm that poses a significant threat to its American competitors. After the company revealed its model, which answers questions and solves equations with the quality of OpenAI’s ChatGPT but at a fraction of the computing cost, U.S. tech stocks like Nvidia — which provides the computing power for American AI companies — plummeted. On the most recent episode of Pivot, co-hosts Kara Swisher and Scott Galloway discuss how DeepSeek is disrupting the burgeoning industry.

Twice weekly, Scott Galloway and Kara Swisher host Pivot, a New York Magazine podcast about business, technology, and politics.

Kara Swisher: This is a really interesting story. I think we have discussed the amount of spending on AI that U.S. companies do — the price of chips, the run-up of Nvidia. But there’s a new AI model on the scene that’s smart, cheap, and made in China. It’s called DeepSeek, and it’s causing a panic in Silicon Valley, which is paying a lot of attention, and also on Wall Street. DeepSeek has reportedly outperformed models from OpenAI, Meta, and Anthropic in some third-party tests, and it operates at a fraction of the cost of those models using fewer high-end chips. The markets are not reacting well to DeepSeek as of this recording.

There’s a lot to talk about, and I’ve seen different analyses of exactly what DeepSeek does. Yann LeCun from Meta was saying they’re doing a cheap and dirty version. The stuff the U.S. companies are doing is much more advanced. We’re going to talk about Meta’s AI plans in a bit — they’ve reportedly set up several war rooms to dissect and analyze DeepSeek. It’s currently No. 1 on Apple’s free Top Apps chart — China invading this country in a very different way.

So, thoughts on this situation?

Scott Galloway: Well, first, you just have to temper this. Nvidia has shed something like a half a trillion dollars, which, basically, if you take out Tesla, is the value of the entire global automobile industry. So........

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