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President Trump's $500 billion AI project, dubbed Stargate, appears to be in jeopardy.
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Shortly after his inauguration on Jan. 20, President Donald Trump hosted an event at the White House that featured 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, which aims to invest $500 billion into American technology companies over the next four years.
While initial reactions to this initiative were positive, the euphoria was short-lived. Just days after the Stargate announcement, investors were focused on a new AI start-up out of China called DeepSeek.
Below, I'm going to explore some of the main talking points surrounding DeepSeek and assess if the newest AI darling poses a threat to Trump's Stargate agenda.
What makes DeepSeek such a point of contention is that the company claims to have trained its models using older hardware compared to what AI companies in the U.S. are leveraging. For example, over the last couple of years, you've likely heard business leaders talking about Nvidia's (NVDA 0.01%) graphics processing units (GPU) -- namely the Hopper and Blackwell architectures. These are Nvidia's most sophisticated -- and expensive -- chips.
However, DeepSeek's developers claim to have used older GPUs and less expensive infrastructure from Nvidia, primarily a cluster of H800 chips.
This is important because the team at DeepSeek is subtly implying that high-caliber AI can be developed for much less than what OpenAI and its cohorts have been spending. If that's the case, it's reasonable that investors would expect a major pullback on AI infrastructure spending. While I acknowledge the logic supporting the bear narrative here, let's explore if this argument is really holding up.
Image source: Getty Images.
Over the last couple of weeks, several big players in the AI revolution reported earnings for the fourth quarter and full year 2024.
In the days following DeepSeek's initial headlines, Palantir Technologies CEO Alex Karp told CNBC that the advancements from the Chinese start-up should inspire U.S. technology businesses to double down on their own AI developments and continue investing in innovation.
Considering the largest technology companies in the world (not just the U.S.) are planning to spend over $320 billion in AI infrastructure just this year underscores Karp's commentary. All told, I don't think DeepSeek is derailing Stargate in any sense.
As of now, AI's biggest spenders appear to be spending even more. If anything, the arrival of DeepSeek has become a tailwind for domestic AI infrastructure investment -- which should bode well for the Stargate project over the next several years.