I want to try to cut through some of the noise that’s circulating on the rise of DeepSeek R1, the new open source AI model from China. We’re going to see so much writing about the model, its origins, and its creators’ intent over the next few days. But no detail will be more meaningful than how cheap DeepSeek makes running AI models.
Infrastructure spending, until this point, has buoyed the entire AI industry. Tech companies spent billions of dollars on data centers and compute, and promised hundreds of billions more, grounding Wall Street’s expectations of the technology’s potential. OpenAI raised $6.6 billion last year, much of it to be spent on training, giving investors a sense of what it expected in return, and hence what they might expect on the dollars they put in.