On January 27, 2025. China’s deep seek company announced that they only spent $6 million on their R1 AI model which took around two weeks to develop. It used less-developed Nvidia H800 chips to build the system. A v3 app became the top download on Apple stores on Monday in the US.
However, tech critics have a stance that Deepseek has only mentioned the cost of production and there is nothing mentioned about the training cost of the v3 model. Moreover, nothing is mentioned about the more publicized R1 model pricing.
This news has steered a debate in the US tech arena about the AI giants investing billions of dollars in AI infrastructure. Hence, sharpening the scrutiny of the investors. Investors in the US market are now concerned about the huge influx of money compared to the slow returns last year.
With most of the US AI companies announcing results this week or the following, investors are expecting the companies’ executives to be more clear about their spending strategy, as the industry is set to spend $250 billion in the coming year.
Impact On Stocks
Tech giant Microsoft experienced a fall of 3.8% in its stock, while the involved partner fell by 16% and TSMC stocks fumbled by 14%.