Abishek D Praphullalumar
DeepSeek is back in the headlines, and this time, it’s not just about shaking up the AI landscape it’s about money. The Chinese AI disruptor that sent shockwaves through global markets earlier this year with its low cost, high performance models is now claiming theoretical profit margins of 545%. If true, this would position DeepSeek as one of the most lucrative AI ventures in history. But as with many bold claims in AI, the details matter.
In my previous articles, China’s DeepSeek AI: A Trojan Horse of CCP Censorship and Global Surveillance, I dissected the company’s rapid rise, questionable transparency, and geopolitical implications. More recently, in DeepSeek’s Disruption: The AI Shake-Up No One Saw Coming, I examined how it forced industry titans like Baidu and OpenAI to rethink their strategies. Now, DeepSeek is making another bold claim one that could redefine how we evaluate AI profitability, or expose yet another layer of hype.
Theoretical Profits vs. Reality
Over the weekend, DeepSeek published a breakdown of its so called “cost profit margin,” stating that if all its current user activity were billed at the highest paid tier for its R1 model, the company would generate $562,027 per day while spending only $87,072 on GPU rental costs. On paper, this translates to a staggering 545% margin. However, the fine print tells a different story.
🚀 Day 6 of #OpenSourceWeek: One More Thing – DeepSeek-V3/R1 Inference System Overview
— DeepSeek (@deepseek_ai) March 1, 2025
Optimized throughput and latency via:
🔧 Cross-node EP-powered batch scaling
🔄 Computation-communication overlap
⚖️ Load balancing
Statistics of DeepSeek's Online Service:
⚡ 73.7k/14.8k…
DeepSeek itself admits that actual revenues are “substantially lower.” The reason? A large portion of its services remain unmonetized, including web and app access. Its V3 model is offered at lower price points, and it provides discounts for nighttime usage. This means that while the numbers look impressive, they are based on an ideal scenario that doesn’t reflect the real world dynamics of AI monetization.
AI companies, no matter how innovative, have historically struggled to convert free tier users into paying customers. Even OpenAI, despite its dominance, relies heavily on enterprise clients and partnerships to sustain profitability. DeepSeek’s estimates rely on an ideal scenario that may not align with real world user behavior.
The NVIDIA Stock Crash & DeepSeek’s Role
DeepSeek has already proven that it can send ripples far beyond the AI sector. Earlier this year, it claimed to have developed its R1 model for just $6 million an assertion that led to significant market reactions. Investors began questioning the valuation of AI hardware giants like NVIDIA, contributing to a staggering $600 billion wipeout in tech stock value in a single day.
This latest profitability claim further solidifies DeepSeek’s narrative as the most cost efficient AI player in the market, prompting renewed discussions about AI business models. However, industry analysts have contested DeepSeek’s development cost figures, with some estimating that training and deploying its models would have realistically required an investment closer to $1.6 billion.
What’s Next for DeepSeek?
Beyond the financial posturing, DeepSeek is still a formidable force in AI. Its technology momentarily surpassed OpenAI’s ChatGPT on Apple’s App Store rankings, though it has since dropped back to sixth place in the productivity category. The company’s rapid rise has also forced legacy players like Baidu and OpenAI to rethink their pricing strategies perhaps its most tangible impact so far.
But the bigger question remains: Can DeepSeek sustain its momentum? Profitability in AI is not just about training efficient models; it’s about finding reliable revenue streams, securing long term infrastructure, and navigating regulatory scrutiny. With its ties to the Chinese government and global concerns about AI governance, DeepSeek’s future may depend less on its self reported margins and more on how the world reacts to its growing influence.
For now, DeepSeek remains an evolving force in AI one that continues to make headlines, raising both intrigue and skepticism about its long term role in the industry.
