How China's DeepSeek AI threatens Trump's $500bn Stargate project and NVIDIA's stock

President Donald Trump on Tuesday talked up a joint venture investing up to $500 billion for infrastructure tied to artificial intelligence by a new partnership formed by OpenAI, Oracle and SoftBank. The new entity, Stargate, will start building out data centers and the electricity generation needed for the further development of the fast-evolving AI in Texas, according to the White House. The initial investment is expected to be $100 billion and could reach five times that sum.

But his plans were soon diminished by the emergence of DeepSeek, a cheap-to-run AI lab out of China which is claimed to have only taken two months to build. The recent developments have sparked concerns about whether America’s dominance in artificial intelligence is waning, and have raised doubts about the huge investments by big tech in AI models and data centers. This was most noticeable when NVIDIA's, a key technology partner in Stargate, stock tumbled by 5% in overnight trading on Sunday.



Economist Ed Yardeni highlighted that DeepSeek spent just $5.6 million over two months to develop its latest AI model. However, DeepSeek's success could put pressure on U.

S. earnings reports, Yardeni warned, especially as companies like Google, Meta, and Microsoft ramp up their capital spending. Microsoft, in particular, is the largest investor in OpenAI.

Yardeni told Investors Business Daily: "This could spell trouble for the 'Magnificent 7,' who had hoped to dominate the AI market with their pricey AI offerings. "The real question is whether they'll disappoint investors, as their capital investments in AI are growing faster than their revenues, which could squeeze their overall profit margins." He also noted that chipmaker Nvidia might feel the impact.

" The push to build data centers predates Trump's presidency. Last October, the financial company Blackstone estimated that the U.S.

would see $1 trillion invested in data centers over five years, with another $1 trillion being committed internationally. Those estimates for investments suggest that much of the new capital will go through Stargate as OpenAI has established itself as a sector leader with the 2022 launch of its ChatGPT, a chatbot that captivated the public imagination with its ability to answer complex questions and perform basic business tasks. The White House has put an emphasis on making it easier to build out new electricity generation in anticipation of AI's expansion, knowing that the United States is in a competitive race against China to develop a technology increasingly being adopted by businesses.

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