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DeepSeek ‘punctures’ AI leaders’ spending plans, and what analysts are saying
Chinese AI firm DeepSeek has emerged as a potential challenger to U.S. AI leaders, demonstrating breakthrough models that claim to offer performance Chinese firm's efficient AI model raises questions about Big Tech's massive infrastructure spending plans.
Founded in 2023 by Liang Wenfeng, former chief of AI-driven quant hedge fund High-Flyer, DeepSeek makes its models open-source and incorporates a reasoning feature that articulates its thinking before providing responses. While Jefferies warns that DeepSeek’s efficient approach “punctures some of the capex euphoria” following recent spending commitments from Meta and Microsoft — each exceeding $60 billion this year — Citi questions whether such results were achieved without advanced GPUs. With DeepSeek delivering performance comparable to GPT-4o for a fraction of the computing power, there are potential negative implications for the builders, as pressure on AI players to justify ever increasing capex plans could ultimately lead to a lower trajectory for data center revenue and profit growth.
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