China’s DeepSeek has shaken up the AI world with the release of an open-source AI model that reportedly outperformed OpenAI’s in several benchmarks. Even more startling is the company\u2019s claim that its AI technology was developed for only $5.6 million.<\/p>\n
This figure has raised eyebrows, especially as companies like OpenAI and Anthropic have spent hundreds of millions annually to develop their large-language models. Meanwhile, tech giants such as Microsoft have guided for an $80 billion expenditure in 2025, and Meta has projected spending between $6 billion and $65 billion this year, much of it directed toward Nvidia\u2019s GPUs.<\/p>\n
As an investor in OpenAI and Anthropic through Fundrise<\/a>,<\/strong> as well as an owner of most of the U.S. big tech stocks, DeepSeek’s performance has me intrigued.<\/p>\n <\/p>\n Founded in 2023 by Liang Wenfeng, a former chief at AI-driven quant hedge fund High-Flyer, DeepSeek has adopted an open-source approach to AI development. This strategy enables the global developer community to inspect, enhance, and innovate upon its software.<\/p>\n DeepSeek claims its\u00a0R1\u00a0model matches or exceeds OpenAI and Meta\u2019s leading products in benchmarks like\u00a0AIME 2024 (mathematical tasks),\u00a0MMLU\u00a0(general knowledge), and\u00a0AlpacaEval 2.0\u00a0(Q&A performance). It also ranks highly on UC Berkeley\u2019s Chatbot Arena leaderboard. All of this is hard to believe with such limited resources.<\/p>\n The company\u2019s mobile app, launched in early January 2025, quickly rose to the top of iPhone download charts in countries like the U.S., Australia, and the U.K. What partly sets DeepSeek apart is its AI model,\u00a0R1, which explains its reasoning before delivering responses\u2014a key differentiator from competitors like OpenAI\u2019s ChatGPT.<\/p>\n How did a small startup with fewer than 200 employees and a budget that\u2019s half of what many personal finance enthusiasts consider ideal for retirement<\/a> manage to compete effectively with U.S. giants? The answer might lie in necessity. When something becomes imperative, innovation often follows.<\/p>\n As a parallel, consider Financial Samurai\u2014just a two-person team (my wife and me) operating on a modest budget, yet still managing to compete effectively against larger sites with teams of writers, editors, and freelancers. I wrote this article from 4:30 am to 6:15 am PST while on holiday skiing in Palisades, Lake Tahoe because, since 2009, I feel a responsibility to the Financial Samurai readership to keep you informed.<\/p>\n If we ever lost everything and needed to rebuild our net worth by earning millions online<\/a> to support our children, I\u2019m confident we could. I would gnaw off my arm and then gouge out my eyeballs if it meant keeping my children alive! There is nothing a parent wouldn’t do for their children.<\/p>\n However, if Financial Samurai were to perform at the same level as DeepSeek, it would be like this site generating as much traffic as\u00a0The New York Times<\/em>\u2014a media giant with ~1,700 journalists and 5,800 total employees. Such an achievement would be virtually impossible<\/em>, which is why I find it hard to believe DeepSeek only spent $5.6 million without receiving substantial support<\/em> from the Chinese government.<\/p>\n U.S.-based Alex Wang, the 28-year-old CEO of Scale AI, told CNBC<\/a>:<\/p>\n \u201cThe Chinese labs have more H100s than people think,\u201d referring to Nvidia\u2019s GPUs, which are restricted from export to China. \u201cMy understanding is that DeepSeek has about 50,000 H100s\u2014which they can\u2019t talk about, obviously, because it violates U.S. export controls.\u201d<\/p>\n<\/blockquote>\n The logical conclusion seems to be that DeepSeek has far more resources than it\u2019s disclosing to the public. Once the initial panic subsides, those with insider knowledge will likely reveal the true extent of DeepSeek\u2019s capabilities and support.<\/p>\n It\u2019s clear no U.S. AI company will sit idle while their future\u2014and fortunes\u2014are at stake. Here\u2019s what I predict:<\/p>\n In light of these trends, I\u2019m buying the dip<\/strong> in U.S. big-cap tech stocks and private AI companies<\/a>. Lower costs mean greater AI adoption and ultimately higher profitability for these companies. <\/p>\n Apple stands to be one of the biggest beneficiaries of DeepSeek\u2019s advancements. With its massive ecosystem and late entry into heavy AI CAPEX spending, Apple is well-positioned to capitalize on lower costs, increased AI adoption, higher future earnings, and improved customer satisfaction. I’m also talking my book as Apple is my largest public stock holding.<\/p>\n Please note, this is not investment advice for you. It simply reflects what I am doing with my own money. Risk assets carry no guarantees, and you must take full responsibility for your financial decisions.<\/p>\n If the S&P 500 faces a prolonged 10%+ slump over the next 3\u20136 months, Treasury bond yields will likely decline as investors seek the safety of risk-free returns.<\/p>\n Lower Treasury yields would, in turn, lead to reduced mortgage rates, driving greater demand for U.S. real estate. This could remind investors of the growing disconnect between residential commercial real estate<\/a> values and the stock market since early 2023. Additionally, many may revisit the idea of converting volatile stock market gains into tangible assets, like real estate, that offer both stability and everyday utility.<\/p>\n I\u2019ll continue dollar-cost averaging<\/a> into the S&P 500, private AI companies, big tech, and residential real estate. It’s precisely during moments of market panic that disciplined investing becomes most critical. When you focus on long-term goals\u2014whether retirement or securing a future for your children\u2014deploying capital during downturns becomes much easier to do.<\/p>\n One thing is certain: the AI and investment landscapes are evolving rapidly, creating both risks and opportunities for those who stay informed.<\/p>\n Readers, what are your thoughts on DeepSeek’s open-source AI model? Do you believe the company truly spent just $5.6 million to compete effectively with the likes of OpenAI, Anthropic, Google, and Meta? Is this the beginning of the end for the Magnificent 7, or do you think U.S. big tech will innovate their way through the challenge? And with the current panic selling, how are you deploying your capital?<\/em><\/p>\n Again, this article is not investment advice for you. It simply reflects what I am doing with my own money. We have completely different financial circumstances. Invest at your own risk.<\/em><\/p>\n If you’re looking to gain more exposure to AI, as I am, check out\u00a0Fundrise’s venture capital product<\/a><\/strong>, which invests in private AI companies. I’m dollar-cost averaging in over the next three years. Fundrise is a long-time sponsor of Financial Samurai. \u00a0<\/p>\n Listen and subscribe to The Financial Samurai podcast on\u00a0Apple<\/strong><\/a>\u00a0or\u00a0Spotify<\/strong><\/a>. I interview experts in their respective fields and discuss some of the most interesting topics on this site. Your shares, ratings, and reviews are appreciated.<\/p>\nNecessity Is the Mother of Invention<\/h2>\n
Do Whatever It Takes To Survive<\/h2>\n
The Other Side of the Coin<\/h2>\n
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What I Think Will Happen And How I Plan To Invest In An AI War<\/h2>\n
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