Analysts say that DeepSeek is the 'Temu of AI' as it wreaks havoc on the expensive AI industry

DeepSeek has been in the headlines as it has completely upended the entire AI industry, swiping $2 trillion off the US stock market, and now analysts have called the Chinese AI firm the "Temu of AI".

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Now we've got Wedbush analysts, led by Dan Ives, saying in a new note that they "view the DeepSeek fear across the tech world as in essence a 'tech AI head fake' that will be short-lived as more details and analysis comes out about DeepSeek's model and China resources".

DeepSeek's new R1 model only cost $5.6 million to train, which is insane considering that that's about the salary of an American expert in AI can command. AI training costs so, so much more on the opposite side of the pond with prices ranging between $100 million up to $1 billion and beyond... so you can see why analysts have their knickers in a twist.

OpenAI's GPT-4 model cost over $100 million to train, directly from the mouth of CEO Sam Altman... so $5.6 million to train DeepSeek R1 and disrupt the AI industry is a massive game changer. The Wedbush analysts continued: "DeepSeek created an awesome LLM model (and credit to its software developers) however this Chinese AI small lab/LLM model is not bringing down the entire US tech ecosystem with it".

They added: "Just like Temu was the 'Amazon (AMZN) model destroyer' a few years ago... Amazon's team adjusted and now look".

The analysts explained: "We have spoken to many enterprises heading down the AI path/use cases in no way does DeepSeek make them flinch on spending seven/eight figures of their IT budgets over the next year on AI initiatives. DeepSeek does not disrupt the $2 trillion of AI Cap-Ex set for the next 3 years with NVIDIA, Microsoft, Google, Amazon, Palantir, ServiceNow, Salesforce, Oracle, TSMC, and others front and center poised to benefit".

"LLM models will become cheaper and more commoditized over time...the value however is in the data, use cases, algorithm reasoning, and storage for AI. In a nutshell, DeepSeek created an awesome LLM model (and credit to its software developers) however this Chinese AI small lab/LLM model is not bringing down the entire US tech ecosystem with it. Just like Temu was the"Amazon model destroyer"a few years ago...Amazon's team adjusted and now look".