DeepSeek sinks the "Stargate"?
Investors have always been cautious about AI companies claiming the need for huge amounts of funding to train models, especially in the absence of short-term profit plans. The sudden rise of DeepSeek seems to validate this concern, as NVIDIA's market value evaporated by nearly $600 billion overnight, even exceeding the total budget of "Stargate."
DeepSeek is surging, and concerns about the over-speculation in the AI industry are rapidly escalating, leading to a heavy blow to tech stocks and dousing cold water on the "Stargate" project.
Overnight, NVIDIA's market value evaporated by nearly $600 billion in a single day, even surpassing the total budget of "Stargate."
"Stargate" is an AI infrastructure plan announced shortly after Trump took office, developed in collaboration with companies like OpenAI, SoftBank, and Oracle, aiming to raise $500 billion over the next four years for the construction of ultra-large-scale data centers. However, the rise of DeepSeek has cast a shadow over this ambitious plan, especially as DeepSeek claims its AI model's performance can rival that of OpenAI, but at a fraction of the development cost, raising investor doubts about the reasonableness of the hefty investments in AI companies.
In fact, investors have been cautious about AI companies' claims of needing massive funds to train models, particularly in the absence of short-term profit plans. DeepSeek's sudden popularity seems to have solidified these concerns, leading Wall Street to start selling off AI-related stocks. Some analysts pointed out:
"If DeepSeek can survive with a smaller data center, then large tech companies may have overspent on the power for their AI plans."
Other analysts have stated that DeepSeek's rise could be an "extinction-level event for venture capital firms fully invested in foundational model companies."
It is noteworthy that SoftBank, involved in this project, had promised to invest $50 billion in the U.S. and create 50,000 jobs eight years ago, but a significant portion of that funding went to WeWork, which ultimately filed for bankruptcy. This time, SoftBank has made another $100 billion investment commitment, and analysts believe that investors may demand more explanations this time around