DeepSeek proves that affordability can still mean high profit margins GLM proves that Chinese models can make money KIMI proves that Chinese models can also sell at high prices A large portion of U.S. cloud providers' capital expenditures comes from orders by Anthropic and OpenAI. - Initially, Anthropic and OpenAI not having enough compute power meant the global compute capacity was insufficient. - Then the logic shifted to compute-rich companies like Meta and SpaceX selling to compute-deficient Anthropic and OpenAI. - Now, the price-performance ratio of Chinese models is starting to eat into the market share of Anthropic and OpenAI, while latecomers like Grok and Meta are catching up fast. The compute gap for the two is no longer as significant, and capital expenditures might pause. Only the top-tier models will face compute shortages, but their market share is being divided by newcomers. The total capital expenditures of U.S. giants might slow down.