Deepseek R2 Is About To Change That AI Industry (Deepseek R2 Leaks!)

so the AI industry is actually still continuing to heat up as deep seek are actually rushing to launch their new AI model and they are choosing to go all in on AI if you aren't familiar with deep seeks models I'm pretty sure you haven't been in the AI space but this is a company that completely put the AI industry on a hold because they did something that nobody expected they managed to make really good Frontier models for a fraction of the cost and apparently now they are looking to launch their second iteration R2 and I think this is even more concerning given the state of the AI industry so you can see right here that it actually states that deep seek are actually planning to release this in early may but they now want this early as possible two of them said without providing specific so this is super interesting because it was only recently where deep seek managed to LeapFrog other companies in terms of the price to Output quality but what we have here is an incredible situation that may turn the AI industry on its head because if they can actually get R2 which will be the second iteration of their thinking models to anywhere near the quality that we've recently seen from Frontier Labs like anthropic and open AI for a fraction of the cost then this could seriously put the Western AI Nations or should I say Western AI companies in a very interesting predicament currently I don't think developers and users have any loyalties to these brands of course A lot of these brands do have you know brand names like chat gbt of course grock and Elon Musk but many developers are always seeking cheaper prices and they're wondering how they can reduce costs for their apps or their software applications and one of the key areas that they're actually going to be focusing on is going to be coding so in this article it actually talks about how the company says that it hopes that the new model will produce better coding and be able to reason in languages Beyond English and details of the accelerated timeline have not been previously reported now the reason I'm actually talking about coding here is because I do believe that coding is one of the hardest tasks to do in AI it is certainly very interesting and I think the fact that a lot of people do use claw 3. 5 son it if we do get to a stage where deep seek actually does better coding than claw 3. 5 or 3. 6 on it then that is going to be super interesting because that would basically remove claude's entire market share and it wouldn't be the first time that you know this company has put the AI industry on a hold for example if we look at these recent coding benches the agentic coding evaluation using Devon is the AI agent framework for software developers and they are working with large Enterprises to reduce the work that software developers have to do and automate a bunch of that stack and you can see right here that the model that performs the best is of course the Sonet 3. 7 which was newly released compared to you know deep seek R1 you can see that one is at 51% and other Frontier models significantly outpace this one but what happens if deep seek R2 manages to surpass Sonet 3. 7 or even manages to get wedged in between here I think this would Mark a very pivotal moment for the AI industry as coding is something that many individuals do focus on and they are currently using to build our apps and many different pieces of software so you can see right here this is also another Benchmark that's super interesting this is the Ada polygot coding Benchmark and this is a tool designed to evaluate how effectively AI language models can translate natural coding requests into executable code that passes unit tests basically this Benchmark analyzes a variety of different code and it assesses not only the model's coding ability but also the capacity to edit existing code and format those edits appropriately for integration into source files now what we can see here as well is that very interestingly we can see that deep seek R1 plus claw Sonet 3. 5 that kind of agentic framework is actually one of the cheapest in this area we can see that when we look at the total cost versus the you know performance metrics that we're getting here we can see that this one is only $13 and is pretty high in terms of the score whereas the other ones are you know $18 $100 and this one is $36 now I will say that it's quite likely that people will prefer accuracy over anything so whilst yes the cost is going to matter I do think for many different applications this is something that they will have to focus on in terms of the fact that look accurac accy will be important for deep seek if they are to get that but I think one of thing that makes deep seek so unique is the fact that their accuracy doesn't matter that much of course it's pretty accurate but their price is so low that so many people want to use it because it is basically free now if we also do look at the LMS y Arena this is of course the qualitative Benchmark which actually uses individuals such as yourself to look at how you can rank this we can actually see that deep seek R1 is only third in terms of the leaderboard space or maybe fifth you can see right there

but this is still a relatively High spot for a non-thinking model and even Claude 3. 7 Sonic does actually rank lower on this Benchmark I do have to say however that this Benchmark is quite likely going to be one where the Vibes are really important so for example I do think models like GPT 4. 5 would do well here and I wouldn't really think that thinking models would do that well here but it's going to be interesting to see where deep seek R2 does because if that once again manages to Leap Frog these companies of course I don't think these benchmarks are that important but I will say it will go to show the quality that they're going to be able to do and also if they are able to get their second iteration out very quickly as early as May which is only around 60 to 90 days away from now I think that is going to be a remarkable turnaround in terms of how they're managing to do this and I think that would be rather worrying imagine you're a company that's able to churn out models really quickly for a fraction of the cost the feedback loop in terms of impr improving each Model cycle is going to get quicker each time so it's going to be super interesting and one of the things about R2 which is you know really worrying people is that recently deep seek actually released some information on Twitter they actually spoke on day six of their open source week that there was one more thing that they wanted to talk about and they spoke about the statistics of their online service and the fact that their profit margin was 545 that means that they're actually a profitable company now why is this something that should surprise you well if you've been in AI you'll know that they're you know on the back end of things these companies aren't really making money and they have to continuously you know have these huge funding rounds for example open AI had to have a $5 billion loss this year on a $3. 7 billion Revenue in this year this was super interesting of course their revenue is growing year on year which is good but many people are speculating that these Western tech companies are simply spending money on things that they won't need I don't think that is the case in this specific scenario I think AI is a specific scenario where you do need to spend a lot of money upfront and the profits will come later down the line once these gains are realized but it is starting to beg the question which is why the stock market kind of took a massive dive is that look if these companies can actually be profitable and can actually have continued users how on Earth is open eye losing billions of dollars in revenue and one of the things that you have to know is that you know models like GPT 4. 5 they require significant investment in computational resources and infrastructure remember with GPT for that apparently cost over $100 million to train and those expenses actually contribute to the company's projected losses such as this $5 billion loss that you're seeing right here and of course open AI they've invested into Stargate the initiative they want to have massive data centers for future inference but what is interesting is that even despite these losses opening actually continues to gain substantial Investments due to its potential for long-term profitability and the market leadership in AI I remember that there were discussions of the recent fundraiser rounds and apparently every single fundraiser round for open AI is you know oversubscribed saying basically saying that look every time they go for a round where people are allowed to invest these investors essentially are so eager to invest in open ey that some of them don't even get the chance to which of course for open ey is most certainly a great problem to have and you can see right here that samman actually talks about the fact that insane thing we currently losing money on opening I Pro subscriptions people use it much more than we expected now something that I do think is interesting and something that a lot of people are overseeing is the fact that whilst yes other companies are making money well you know deep seek are I do think the point of this is that every single year the price of tokens does dramatically fall so you can see right here first GPT 4 was $36 per a million tokens then GPT 4 Turbo was $40 $1 per million tokens then it was $7 then $4 then you can see GPT for mini was 25 cents per a million tokens and this is something that continues to get truer and becomes clearer as the AI industry matures is the fact that every year the price of these models per token of intelligence will continue to go down and I think this is somewhat of a Bad Thing some people have said that look how you guys going to make profit from this if other companies are going to continue to undercut you but I think that this is just something that actually benefits openi because essentially the service they're providing is going to be nearly free and provided they have a good brand then they are going to have one of the best products that people continue to want to use now even if deep seek do manage to release R2 I do think that the roll out may be a bit shaky R2 of course is going to be the second iteration of the model but you do have to remember previously there were situations where R2 is going to worry the US Government because

they've identified the leadership of AI as a national priority and it says here that the release May further Galvanize Chinese authorities and companies dozens of which they have stated you know started integrating deep seek models into their products and basically what they you know worried about is the fact that deep seek you know they're probably going to ban this okay because you know a few weeks ago many government agencies in countries including South Korea and Australia have blocked access to Chinese AI startup deep seek mostly for government employees so you know certain countries are not taking this well they do not want deep seek on their phones of course they are basically thinking that it may be spy way or something like that and for government safety this is going to be banned I do wonder if it is going to be another Tik Tok situation where they do basically ban the app due to the situation where they think of it as a national security risk but overall I think that they should really be worried about China potentially surpassing them in the race to AGI they've seemingly moved very quickly and I think the reason that China have actually moved very quickly in terms of deep seek is the fact that they have a very different management style this is probably how they've been able to achieve so much in such a short space of time you can see right here that it says that leang gave us control and treated us as experts he constantly asked us questions learned alongside us and this is someone who left the company deep seek allowed me to take control of ownership critical parts of the pipeline which was very exciting and essentially what we had here was something that was basically described as a flat management style this was something that was very Innovative I believe because this is something where they basically have everyone working on the same level so it's not compartmentalized you have everyone basically working together and this allows the organization to move a lot more smoothly because individuals know how things are and they essentially work together more effectively whereas you know other companies are a lot more hierarchical meaning that you have to speak to the manager and then this person and that person before it all goes up the chain and it all goes down the chain so I think this kind of management style may actually be more common place in the future as we start to realize that look as a company you can move a lot quicker if you have this flat management style so what do you guys think about R2 are you actually excited for the competition because I think that it's actually good for us because it actually forced opening ey to release certain models and speed up certain releases I think it's going to be super interesting to see what happens with R2 if it does manage to come out sometime next month during April I think that would be super interesting considering that the companies typically take months and months to release New Frontier models but I cannot wait to see where things go next with that being said if you enjoy the video I'll see you in the next one