DeepSeek’s AI breakthrough challenges Big Tech with a cheaper, efficient model. This may be bad for the incumbents, but good for everybody else.

Chinese startup DeepSeek's cheaper AI is sharpening investor scrutiny of the billions U.S. tech giants are pouring to develop the technology and analysts say it will dominate this week's much-awaited results from industry bellwethers.

The start-up had become a key player in the “Chinese Large-Model Technology Avengers Team” that would counter US AI dominance, said another. China’s delight, however, spelled pain for several giant US technology companies as investors questioned whether DeepSeek’s breakthrough undermined the case for their colossal spending on AI infrastructure.

The tech giants vow to barrel ahead despite the jolt from China’s DeepSeek.

Satya Nadella, CEO of Microsoft, said the spending was needed to overcome the capacity constraints that hampered the tech giant's ability to capitalize on AI.