As major US tech companies prepare for earnings announcements, analysts are particularly focused on the recent introduction of an AI model by China’s DeepSeek. This model, called R1, rivals US counterparts in effectiveness at a significantly lower training cost, raising concerns about return on investment for tech firms heavily investing in AI. The ramifications of R1’s launch were evident, with US market capitalization dropping over $1 trillion in a single day. Analysts anticipate discussions on DeepSeek's influence on future spending during earnings calls, as investors seek clarity on sustainability and competitive advantages in AI investment strategies.
DeepSeek's new AI model, R1, shook the tech industry this week, wiping more than $1 trillion off US stocks in market cap in one day. It offers a model that seems similarly effective to ones made by US companies.
Now DeepSeek has made justifying that spending to investors and analysts a lot trickier for execs, PR, and IR. 'I expect pretty much everyone to get questions on it,' Morningstar analyst William Kerwin said.
Investors will want to know if R1 changes companies' views on future infrastructure spending, Kerwin said. That could 'temper the demand' for chips from Nvidia.
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