Stargate vs. DeepSeek: The AI Showdown in Tech Investments

Shortly after his inauguration on Jan. 20, President Donald Trump hosted an event at the White House featuring some of the biggest names in the technology industry.

OpenAI CEO Sam Altman, Oracle founder Larry Ellison, and Japanese tech mogul Masayoshi Son are leading the charge for an infrastructure project called Stargate, aiming to invest $500 billion into American technology companies over the next four years.

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While initial reactions to this initiative were positive, enthusiasm quickly waned. Just days following the Stargate announcement, investors shifted their attention to a new AI start-up from China named DeepSeek.

This article explores the main discussions surrounding DeepSeek and evaluates whether this new contender poses a risk to Trump’s Stargate initiative.

DeepSeek Sparks Unease Among Investors

DeepSeek has become a source of contention since it claims to have trained its models using older hardware compared to what many U.S. AI companies are utilizing. For instance, over the past few years, many leaders have emphasized the importance of Nvidia‘s (NASDAQ: NVDA) graphics processing units (GPU), particularly the Hopper and Blackwell architectures, which are Nvidia’s most advanced and pricey chips.

In contrast, DeepSeek’s developers assert they have utilized older Nvidia GPUs, mainly a cluster of H800 chips, which are less costly.

This raises a significant question: Can high-quality AI be developed for much less than what OpenAI and other companies have invested? If this is true, it could lead to a major shift in AI infrastructure spending. Although the logic behind this bearish outlook seems sound, it’s worth examining whether the argument stands firm.

Image source: Getty Images.

Big Tech’s Investment Decisions Speak Volumes

Recently, several major players in the AI sector reported earnings for the fourth quarter and the full year 2024.

• Microsoft: As a significant investor in OpenAI, Microsoft has successfully integrated new AI services across its platforms. The company has invested over $55 billion in capital expenditures (capex) within the past year, much of which has been directed toward its ongoing AI initiatives. Microsoft management recently indicated that the capex budget for this year should range around $80 billion.
• Meta Platforms: Meta has firmly committed to its AI vision, spending $28 billion in capex in 2023. Last year’s infrastructure spending surged by 40%, totaling approximately $39 billion. In its latest earnings call, management projected capex spending for 2025 to reach between $60 and $65 billion, reflecting a possible 67% increase year-over-year at the high end.
• Alphabet: Alphabet has been busy integrating AI services to reduce its reliance on advertising and compete more directly with Microsoft and Amazon. During its fourth-quarter earnings call, the company announced plans to invest around $75 billion in capex for 2025, a 43% increase compared to 2024.
• Amazon: Amazon has also committed significant capital to AI infrastructure recently. The company invested heavily in start-up, Anthropic, which directly competes with OpenAI. This integration has improved sales and profit margins in Amazon Web Services (AWS). During its fourth-quarter earnings call, Amazon indicated it might spend around $105 billion on AI infrastructure this year, marking a 27% increase from 2024.

The Future of Stargate in a Changing Landscape

Following the emergence of DeepSeek, Palantir Technologies CEO Alex Karp stated that advancements from the Chinese start-up should motivate U.S. tech companies to accelerate their own AI innovations.

With leading technology companies globally planning to spend over $320 billion on AI infrastructure this year, Karp’s comments hold weight. Thus, it seems unlikely that DeepSeek will derail the Stargate project.

Currently, top AI spenders are ramping up their investments. If anything, DeepSeek’s introduction may provide momentum for domestic AI infrastructure, creating a favorable outlook for the Stargate initiative in the coming years.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Oracle, Palantir Technologies, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.