DeepSeek Shakes Up AI Investments—Will It Burst the VC Bubble?

[technest]

Up

2

Down

::

The AI investment landscape was jolted this week after DeepSeek, a China-based AI startup, claimed to have built rival models to OpenAI at a fraction of the cost. This news sent tech stocks tumbling, with Nvidia dropping over 15% and the Nasdaq Composite plunging 3% as investors questioned whether the U.S. was losing its AI edge.

Venture capitalists, who poured over $100 billion into AI startups in 2024, are now scrambling to assess the impact. Firms like Andreessen Horowitz, Lightspeed Venture Partners, and Thrive Capital, which have led record-breaking AI funding rounds, may now be rethinking their strategies. The worry? If DeepSeek can deliver cutting-edge AI models for just $6 million, it could undermine the massive valuations of U.S. AI startups like OpenAI ($157B) and xAI ($50B).

Adding to the tension, the White House’s AI Stargate Project, which plans to funnel up to $500 billion into AI infrastructure, could now face political and strategic challenges. Meanwhile, concerns over data privacy and DeepSeek’s Chinese origins may trigger regulatory scrutiny in the U.S.

While it’s too early to predict whether DeepSeek is truly a game-changer, one thing is clear—the AI arms race just got a lot more competitive.

References: https://news.crunchbase.com/ai/chinas-deepseek-tech-openai-nvda/?utm_source=tldrai

Topic