S&P Global — 30 January 2025
Daily Update: January 30, 2025
DeepSeek Challenges Core Assumptions of US AI Dominance
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
Technology companies have operated under the assumption that scale provided an impenetrable moat for their large language model businesses. Investors and customers have consolidated around a small number of technology providers — known as hyperscalers — capable of building the massive datacenters and buying the huge number of powerful chips required to power these new applications. The assumption was that if the language models were large, then the funding, datacenters and technology companies needed to be large as well. This appeared to be the rare technological revolution that favored incumbent technology firms.
Then, on Jan. 10, DeepSeek, a Chinese company founded by hedge fund executive Liang Wenfeng, launched a free chatbot app with performance comparable to the best US large language model applications, despite limited access to high-end NVIDIA chips due to US government restrictions on chip exports. DeepSeek has operated with a fraction of the funding, chips and general scale typical of US models and appears well placed to compete on performance and price.
"Deepseek R1 is one of the most amazing and impressive breakthroughs I've ever seen — and as open source, a profound gift to the world," Marc Andreessen, general partner of Silicon Valley venture capital firm Andreessen Horowitz, posted Jan. 24 on social media platform X.
US President Donald Trump has made AI ascendancy a top priority for his administration, starting with the Stargate Project, a joint venture of OpenAI LLC, SoftBank Corp., MGX Fund Management Ltd. and Oracle Corp. The Stargate Project has announced $100 billion in investment for AI infrastructure, with plans to invest an additional $400 billion over the next four years. Trump has offered to expedite access to power and clear bureaucratic hurdles to fast-track Stargate initiatives.
However, even this massive investment is overshadowed by projected AI investments by the five leading US-based hyperscalers: Microsoft Corp., Amazon.com Inc., Alphabet Inc., Meta Platforms Inc. and Oracle. According to S&P Global Market Intelligence, these five companies spent $231 billion in 2024 alone, with much of this expenditure going toward AI. S&P Global Market Intelligence estimates that these companies will spend nearly $1.6 trillion on capital expenditure in the next five years.
Private equity and venture capital investments in AI infrastructure and technology exceeded $56 billion in 2024. Investment in GenAI infrastructure nearly quadrupled in 2024 to almost $26 billion, up from $6.86 billion in 2023. According to S&P Global Market Intelligence, the trend in the sector is consolidation under a few dominant players as smaller companies are acquired or undergo acqui-hiring.
DeepSeek sent markets into a temporary swoon this week as investors grappled with the implications of its performance. But the ultimate implications of DeepSeek and similar “small” large language models may take months or even years to develop.
Today is Thursday, January 30, 2025, and here is today’s essential intelligence.
Geologic Hydrogen Explorer Koloma, with $400 Mil in Funding, Quiet on Next Step
After announcing plansin 2024 to produce geological, or natural, hydrogen in Kansas, and with almost $400 million in funding, hydrogen explorer Koloma is declining to discuss its next steps following the conclusion of its test drilling program. "We are not aware of a production well or the plans you reference," Koloma spokesperson Kristen Delano told S&P Global Commodity Insights in a Jan. 23 email. "We are aligned with industry standards and public policies and will share updates when there is meaningful news to share."
—Read the article from S&P Global Commodity Insights
Listen: Global Macroeconomic Insights: The US and Mainland China
In this episode of the The Decisive podcast, taken from our Jan. 21 client webinar, Ken Wattrett, vice president of global economics at S&P Global Market Intelligence, leads an insightful discussion of the macroeconomic landscape for 2025. Ken's conversation with Ben Herzon and Yating Xu focuses on the potential impacts of the new US administration's policies on the economy. Various factors are influencing economic forecasts, including trade tariffs, consumer spending — and heightened uncertainty.
—Listen and subscribe to the podcast from S&P Global Market Intelligence
Private Equity Investment in Japan Soars
Japan's share of all private equity and venture capital investments in Asia-Pacific grew in 2024 as the value of private equity deals targeting Japanese companies surged. The value of private equity- and venture capital-backed investment in Japan increased 40.8% year over year to $17.90 billion in 2024, according to S&P Global Market Intelligence data. The amount was equal to 15.6% of all private equity and venture capital investments in Asia-Pacific in 2024, a share that grew from 10.6% in 2023.
—Read the article from S&P Global Market Intelligence
Trump’s automotive tariffs would impact nearly all OEMs
US President Donald Trump is assessing a 25% tariff on all goods from Canada and Mexico. While this would impact all industries, S&P Global Mobility looks at the specific impact of Trump's automotive tariffs on vehicle assembly. President Trump has said the tariff could be applied as soon as Feb 1, 2025, though this timeline seems unlikely. At time of writing, the latest intelligence suggests a more measured approach may still win out, though tariffs could be applied by spring 2025.
—Read the article from S&P Global Mobility
Jet Fuel, Gasoline Propel India's 2024 Oil Demand; Trend Set to Spill Over Into 2025
India's oil products demand grew by nearly 4% year over year in 2024, driven by strong demand for transport fuels and higher consumption from the infrastructure and household sectors, trends expected to continue into the new year, according to government data and analysts. While jet fuel saw the highest growth among all petroleum products, gasoline and LPG demand also experienced strong increases, contributing to an overall 3.9% year over year rise in oil products demand to 240 million mt, or 5.1 million b/d, in 2024, latest provisional data from the Petroleum Planning and Analysis Cell of the oil ministry showed.
—Listen and subscribe to the podcast from S&P Global Commodity Insights
EU, Europe Focus on Increasing EV Uptake to Phase Out ICE Sales by 2035
While the new US administration has pledged to eliminate the country's electric vehicle mandate in favor of promoting true consumer choice, the UK and the EU are focused on increasing EV uptake to meet the common goal of banning the sale of new internal combustion engine vehicles by 2035 at the latest.
—Read the article from S&P Global Commodity Insights
In-person: ESG Insider Live: Navigating the Future of Sustainability (Feb. 6, 2025)
The ESG Insider podcast will be celebrating its 7th anniversary with an exclusive LIVE recording experience in New York City and the official unveiling of its new name. The sustainability landscape is evolving, and market participants are quickly adapting their sustainability journeys to transform their tomorrow. Join experts in sustainability and notable industry thought leaders for a discussion on emerging trends and leading practices in factoring climate change and other sustainability issues into financial decision-making.
—Register for the webinar from S&P Global Sustainable1