China's DeepSeek just pushed out an update to its flagship AI model, showing it's not backing down in the global AI race. The new version, V3.1, comes with a longer context window essentially letting the model remember and process more information in a single query. The company made the announcement on its official WeChat account Tuesday.

It's a timely move. Back in January, DeepSeek's R1 model shook U.S. markets, catching traders off guard and underscoring China's ambition to build its own AI champions. But while U.S. rivals like Nvidia (NASDAQ:NVDA) keep surging ahead powering everything from ChatGPT to cloud supercomputers DeepSeek has struggled to get its hands on the high-end processors needed to train bigger, faster models. That's partly why its next big model, R2, remains delayed.

Even so, V3.1 shows DeepSeek is still iterating quickly, despite supply hurdles. It's a reminder that while Nvidia dominates the hardware side of AI, Chinese firms are racing to prove they can innovate on the software side and keep the pressure on U.S. players.