Artificial intelligence is becoming cheaper: who benefits the most now?

On February 8, 2025, the company DeepSeek is questioning the dominance of American semiconductor companies such as NVIDIA in the field of artificial intelligence (AI). Chinese companies have developed an AI language model that is significantly cheaper than the US model ChatGPT. Analysts predict that the falling costs of AI will benefit technology companies in the software space.

The greater diffusion possibilities of AI technologies could result in higher revenues and margins for software companies. Brad Sills, an analyst at Bank of America, emphasizes that cost efficiency could be a deciding factor in AI adoption. Analysts at Goldman Sachs are also convinced that DeepSeek's innovations can increase software companies' revenues.

Potential beneficiaries of cost reductions

Companies that specialize in enterprise software in particular could benefit from these developments, as Morgan Stanley notes. Microsoft and Salesforce are mentioned as possible winners in the software sector. Microsoft's Copilot Chat has a variable cost of between 1 and 30 cents per prompt, while Salesforce charges a flat fee of $2 per conversion in its Service Cloud.

Lower computing costs could also reduce sales costs for AI computers and thus improve margins. Other companies such as Adobe, MongoDB and Snowflake are also identified as potential beneficiaries. Adobe could benefit from lower AI training costs, enabling cheaper AI capabilities. MongoDB and Snowflake could benefit from reduced inference costs and increasing adoption of language models.

Okta and ServiceNow are other players mentioned in this context. Okta supports access to work tools, which could increase with agent-based applications. ServiceNow could benefit from cheaper inference models, which could increase margins, although it is uncertain what ServiceNow's price/volume balance will be.

In a broader context, Investment Week reports that NVIDIA has capitalized heavily on the AI ​​revolution. Since ChatGPT launched over two years ago, the company's revenue, profitability and cash reserves have skyrocketed. NVIDIA's share price has multiplied eightfold. The company is investing heavily in startups, particularly in the AI ​​space, with 49 funding rounds for AI companies in 2024, compared to 34 in 2023.

These investments exceed the activities of the company's own VC fund NvEntures. Nvidia's goal is to expand the AI ​​ecosystem by supporting major startups. While other major tech companies are also investing in AI startups, NVIDIA is the most active, with Alphabet involved in 73 deals and Microsoft involved in 40 deals. Prominent startups benefiting from Nvidia's investments include OpenAI, xAI and Inflection. NVIDIA thus plays an influential role in the design and development of the AI ​​landscape.