American entrepreneur Palmer Luckey has raised concerns over the recent hype surrounding Chinese AI startup DeepSeek, questioning its claim that it trained an AI model for just $5 million. In an interview with Fox Business, Luckey criticised the U.S. media for what he described as “mindlessly” reporting the claim without proper scrutiny.“I think the problem is they put out that number specifically to harm U.S. companies,” he said. “You had a lot of useful idiots in U.S. media kind of just mindlessly reporting that that’s the case, and neither China nor the media nor DeepSeek has any kind of incentive to correct the record as a lot of U.S. companies like Nvidia crashed to the tunes of hundreds of billions of dollars.”

Lack of Transparency in DeepSeek’s Development Costs

DeepSeek has positioned itself as a competitive force in AI, with its model reportedly matching the capabilities of OpenAI’s ChatGPT and Meta’s Llama at significantly lower costs. The startup has also gained traction, with its app topping Apple’s App Store rankings and reportedly functioning on less powerful Nvidia chips. However, Luckey questioned the transparency of DeepSeek’s claims, pointing out that key expenses, including infrastructure costs, remain undisclosed.

He noted that while U.S. companies publicly disclose full-scale costs for AI development, DeepSeek’s reported $5 million figure lacks crucial details. “I don’t think that people should take what they’re saying at face value, and they should realize that there are a lot of people cheering for the United States to fail,” he said.

Market Impact and Strategic Timing

DeepSeek’s claims contributed to a downturn in the U.S. tech sector, with stock values of major companies, including Nvidia, experiencing significant losses earlier in the week. Luckey suggested that the timing and framing of DeepSeek’s announcement were deliberate, potentially influencing market reactions.

“There’s a reason they put out the news that way, and if the stock market is any indication, it’s accomplishing exactly what they hoped to,” he stated.

Balancing Recognition and Caution

Despite his criticisms, Luckey acknowledged DeepSeek’s progress in AI innovation. However, he warned against overreacting or blindly trusting unverified claims, particularly those that could be used to shape narratives against U.S. tech firms.”So, look, we can recognise that Chinese AI is a real competitive threat without losing our minds over it and falling for CCP [Chinese Communist Party] propaganda,” he said.

DeepSeek’s emergence comes amid growing competition between the U.S. and China in artificial intelligence. While American companies like OpenAI, Google, and Meta dominate AI advancements, Chinese firms are rapidly expanding their capabilities. Beijing has actively supported AI research and development, aiming to position China as a global leader in the sector.

The race for AI supremacy has led to geopolitical tensions, with U.S. policymakers pushing for stricter regulations on Chinese access to advanced semiconductor technology. Meanwhile, American tech giants remain under pressure to maintain their edge in AI while navigating regulatory challenges and public scrutiny.

As debates over AI dominance continue, Luckey’s remarks highlight the ongoing concerns regarding misinformation, economic impact, and national security in the evolving AI landscape.