JonasBarrelov @JonasBarrelov: "𝘿𝙚𝙚𝙥𝙎𝙚𝙚𝙠’𝙨 𝘼𝙄 𝘽𝙧𝙚𝙖𝙠𝙩𝙝𝙧𝙤𝙪𝙜𝙝: 𝘼 𝙂𝙖𝙢𝙚-𝘾𝙝𝙖𝙣𝙜𝙚𝙧..."

Sweden

𝘿𝙚𝙚𝙥𝙎𝙚𝙚𝙠’𝙨 𝘼𝙄 𝘽𝙧𝙚𝙖𝙠𝙩𝙝𝙧𝙤𝙪𝙜𝙝: 𝘼 𝙂𝙖𝙢𝙚-𝘾𝙝𝙖𝙣𝙜𝙚𝙧 𝙛𝙤𝙧 𝘽𝙞𝙜 𝙏𝙚𝙘𝙝? Apple, Amazon, Microsoft, Alphabet (Google), Meta, Nvidia, and Tesla have been spending hundreds of billions to build the most powerful AI models. But last week, a Chinese startup, DeepSeek, shook things up with its R1 AI model, which delivers high performance at a fraction of the cost. 𝙒𝙝𝙮 𝘿𝙚𝙚𝙥𝙎𝙚𝙚𝙠’𝙨 𝘼𝙄 𝙈𝙖𝙩𝙩𝙚𝙧𝙨 DeepSeek’s R1 model is open-source, meaning anyone can access, study, and improve it. But the big deal is that It’s cheaper to train and run than models from OpenAI and Google. If U.S. tech firms can figure out how to replicate its efficiency, AI could become much cheaper—great for some companies, but a nightmare for those who just spent billions on AI data centers. 𝘽𝙪𝙩 𝙄𝙨 𝘿𝙚𝙚𝙥𝙎𝙚𝙚𝙠 𝙏𝙤𝙤 𝙂𝙤𝙤𝙙 𝙩𝙤 𝘽𝙚 𝙏𝙧𝙪𝙚? Some experts are skeptical. The Chinese government may be funding DeepSeek’s research and deployment, which could mean it’s not a fair comparison to AI models built by U.S. companies that rely on private investment. However, DeepSeek has released research papers explaining its methods, and AI labs worldwide are now racing to see if they can replicate it. If they can, it could mark the beginning of a new, lower-cost era for AI, forcing companies like Microsoft, Google, and Amazon to rethink their massive AI spending. 𝘼𝙥𝙥𝙡𝙚: $AAPL (Apple) Apple has spent far less on AI than its rivals, which some saw as a mistake. But if AI models become smaller and more efficient, Apple’s strategy might actually pay off. AI could run directly on iPhones instead of needing the cloud, making Apple’s devices even more powerful. 𝘼𝙢𝙖𝙯𝙤𝙣: $AMZN (Amazon.com Inc) Amazon’s biggest moneymaker is AWS (Amazon Web Services), its cloud computing service. But if AI can run on smaller, local systems instead of the cloud, AWS could lose a major source of revenue. Amazon will still use AI for better shopping recommendations and ad targeting, but its high-margin cloud business could take a hit. 𝙉𝙫𝙞𝙙𝙞𝙖: $NVDA (NVIDIA Corporation) Nvidia has been the biggest winner in the AI boom, but its stock dropped 17% last week as investors worried that cheaper AI could lower demand for its expensive AI chips. On the other hand, some argue that lower costs could increase AI adoption, keeping demand high for Nvidia’s hardware. 𝙏𝙚𝙨𝙡𝙖: $TSLA (Tesla Motors, Inc.) Tesla isn’t focused on building AI models—it applies AI to self-driving, robotics, and automation. Cheaper AI could cut Tesla’s costs, making it easier to scale up its technology and gain a competitive edge. 𝙈𝙞𝙘𝙧𝙤𝙨𝙤𝙛𝙩, 𝙂𝙤𝙤𝙜𝙡𝙚, 𝙖𝙣𝙙 𝙈𝙚𝙩𝙖: Microsoft: Plans to spend $ 80B on AI this year, but cheaper AI could make it easier to roll out tools like Copilot, which helps businesses automate tasks in Office apps. Google (Alphabet): Its cloud business grew 35% last quarter, but if AI becomes cheaper, its huge investments in AI infrastructure might not pay off. That said, Google’s core business (search, YouTube, ads) benefits from cheaper AI. Meta: Spending billions on AI for internal use, but cheaper AI could improve ad targeting and user engagement, making its social media platforms even more profitable. 𝘿𝙞𝙙 𝘽𝙞𝙜 𝙏𝙚𝙘𝙝 𝙅𝙪𝙨𝙩 𝙒𝙖𝙨𝙩𝙚 𝘽𝙞𝙡𝙡𝙞𝙤𝙣𝙨? Amazon, Microsoft, Google, and Meta have spent $ 212 billion on AI infrastructure in the last year alone. But if DeepSeek’s approach is truly a game-changer, these companies may have overspent on expensive AI data centers that are no longer necessary. For now, the AI race is still on, but DeepSeek has completely changed the conversation. If R1’s efficiency is replicable, Big Tech may need to rethink its entire AI strategy.

4 Mentioned

AAPL

AMZN

NVDA

TSLA

Strictly Necessary Cookies

Performance Cookies

Functional Cookies

Targeting Cookies