China’s DeepSeek has shaken up the AI world with the discharge of an open source AI model that has reportedly outperformed OpenAIs in several benchmarks. Even more startling is the corporate’s claim that its AI technology was developed for just $5.6 million.
This figure has raised eyebrows, especially as corporations like OpenAI and Anthropic have spent a whole bunch of hundreds of thousands annually developing their large-language models. Meanwhile, tech giants like Microsoft have forecast $80 billion in spending in 2025, and Meta has predicted between $6 billion and $65 billion in spending this 12 months, much of which can go toward Nvidia’s GPUs.
As an investor in OpenAI and Anthropic appeal for donations, As an owner of most major US technology stocks, DeepSeek’s performance intrigued me.
Necessity is the mother of invention
Founded in 2023 by Liang Wenfeng, a former boss of AI-driven quant hedge fund High-Flyer, DeepSeek takes an open-source approach to AI development. This strategy allows the worldwide developer community to review, improve and innovate their software.
DeepSeek claims its R1 model equals or outperforms leading products from OpenAI and Meta in benchmarks akin to AIME 2024 (math tasks), MMLU (general knowledge), and AlpacaEval 2.0 (Q&A performance). It’s also at the highest of UC Berkeley’s Chatbot Arena best list. With such limited resources, all of this is tough to imagine.
Launched in early January 2025, the corporate’s mobile app quickly rose to the highest of iPhone download charts in countries including the US, Australia and the UK. Part of what sets DeepSeek apart is its R1 AI model, which explains its reasoning before providing answers – a key differentiator from competitors like OpenAI’s ChatGPT.
How did a small startup with fewer than 200 employees and a budget half of what many personal finance enthusiasts consider ideal for retirement manage to compete effectively with the US giants? The answer may lie in necessity. When something becomes imperative, innovation often follows.
Do whatever it takes to survive
As a parallel, consider Financial Samurai – only a two-person team (my wife and I) that works on a modest budget and yet manages to compete effectively with larger sites with teams of writers, editors, and freelancers. I wrote this text from 4:30 a.m. to six:15 a.m. PST during a ski vacation in Palisades, Lake Tahoe due to my commitment to Financial Samurai’s readership since 2009 to maintain you informed.
If we ever lost the whole lot and needed to rebuild our wealth by making hundreds of thousands online to support our youngsters, I’m confident we could. There is nothing that folks won’t do for his or her children.
However, if Financial Samurai performed at the identical level as DeepSeek, this site would generate as much traffic as – a media giant with around 1,700 journalists and a complete of 5,800 employees. One such achievement could be , which is why I find it hard to imagine that DeepSeek only spent $5.6 million without receiving anything from the Chinese government.
The other side of the coin
US-based Alex Wang, the 28-year-old CEO of Scale AI, said CNBC:
“The Chinese laboratories have more H100 than you think,” referring to Nvidia’s GPUs, whose export to China is banned. “As far as I know, DeepSeek has about 50,000 H100s – which of course they can’t talk about because it violates US export controls.”
The logical conclusion appears to be that DeepSeek has much more resources than it discloses to the general public. Once the initial panic subsides, those with inside knowledge will likely reveal the true extent of DeepSeek’s capabilities and support.
What I believe will occur and the way I would really like to speculate in an AI war
It’s clear that no U.S. AI company will sit idle while its future – and fortunes – hang within the balance. Here’s what I predict:
- The US will leverage open source AI models for greater efficiency and faster innovation, including DeepSeek’s model. Companies and investors will proceed to speculate in artificial intelligence, but at a good faster pace.
- Nvidia and other AI chip makers could face a brief decline of as much as 20-25%, followed by a rebound because it accelerates AI adoption Jevon’s paradox. The Jevons paradox states that increasing efficiency in resource use will result in a rise somewhat than a decrease in resource consumption in the long term.
- The Trump administration will take additional measures to guard the US AI industry. The announcement of a $500 billion investment in AI infrastructure – led by Oracle, OpenAI and SoftBank – shows how seriously the US is taking this race.
- Big tech stocks like Microsoft, Meta, Amazon and Palantir could fall as much as 10-15%, but they are going to recuperate as lower AI costs result in higher profits down the road.
Given these trends, I’m buy the dip in US big-cap tech stocks and personal AI corporations. Lower costs mean greater AI adoption and ultimately greater profitability for these corporations.
Apple is prone to be certainly one of the most important beneficiaries of DeepSeek’s advances. With its vast ecosystem and late entry into heavy AI capex, Apple is well-positioned to learn from lower costs, increased AI adoption, higher future revenue, and improved customer satisfaction. I’m also talking about my book because Apple is my largest public stock holding.
Please note that this isn’t investment advice for you. It simply reflects what I do with my very own money. There are not any guarantees with dangerous investments and it’s essential to take full responsibility on your financial decisions.
Real estate could also see a rise in demand
If the S&P 500 experiences a sustained decline of greater than 10% over the subsequent three to 6 months, Treasury yields will likely decline as investors seek the security of risk-free returns.
Lower Treasury yields would, in turn, result in lower mortgage rates and increase demand for U.S. real estate. This could remind investors of the growing gap between residential real estate values and the stock market for the reason that start of 2023. Additionally, many may reconsider the concept of converting volatile stock market gains into physical assets like real estate that provide each stability and on a regular basis utility.
I’ll proceed dollar-cost averaging within the S&P 500, private AI corporations, large tech corporations, and residential real estate. It is precisely in moments of market panic that disciplined investing is most vital. When you deal with long-term goals – be it retirement or securing a future on your children – it becomes much easier to deploy capital during downturns.
One thing is for certain: the AI and investment landscape is evolving rapidly, presenting each risks and opportunities for individuals who stay informed.
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If you are like me and need to get more involved with AI, check this out Fundrise’s enterprise capital productthat invests in private AI corporations. I assume the common cost will probably be in US dollars over the subsequent three years. Fundrise is a long-time sponsor of Financial Samurai.
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