Move over OpenAI and DeepSeek, a new Chinese AI model claims supremacy over both

The AI industry was set alight when DeepSeek unveiled its R1 AI model, which the company claims is comparable in performance to OpenAI's latest AI model but was created for a fraction of the price.

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The new R1 model was created with just $6 million, which is a tiny drop in the lake of money that is pouring into AI companies all throughout the world. For context, OpenAI said it spent approximately $100 million training its latest model, "o3", and it's estimated the company could spend as much as $500 million to create GPT-5, the company's AI model that's on the horizon.

Having a new AI model be released for a fraction of the costs of known AI models caused a massive pullback from investors, resulting in approximately $1 trillion being wiped away from AI companies and the companies that fuel their progression.

Now, a new player has entered the game, and it's claiming to outperform both the R1 model from DeepSeek and OpenAI. According to reports, Chinese B2B company Alibaba has entered the game with its Qen 2.5-Max model, which is an open-source model the company claims is more impressive than R1, and is capable of outperforming OpenAI's GPT-4 model. Moreover, Alibaba says it's able to beat Meta's (META) Llama-3.1-405B. Since the announcement, the share price for Alibaba has increased by 1.2%.

It's currently too early to tell whether R1 or Alibaba's Qwen 2.5 model will come out on top or if it's just hot air from both companies. Regardless of the performance, US-based markets are reacting to the announcement, with OpenAI and Microsoft recently claiming DeepSeek stole OpenAI data to train R1.

• Read more: OpenAI says DeepSeek stole its data to train its breakthrough AI