DeepSeek AI 75% Price Cut - China Destroying USA Tech

Deepseek is making a permanent 75% price cut on its flagship V4 Pro AI model, reducing prices to a quarter of their original level.

OpenAI API tokens initially cost approximately a fifth of a penny per thousand tokens.

One thousand tokens is approximately equivalent to 750 words.

OpenAI's input tokens currently cost approximately 40 cents per million tokens.

Eli the Computer Guy questions the trillion-dollar valuation of AI companies because if input tokens cost 40 cents per million, the required revenue generation to justify such a valuation is immense.

Companies are supposed to be at their lowest valuation on the public market when they conduct an Initial Public Offering (IPO).

Token prices for AI models continue to decrease, as evidenced by China's Deepseek.

Huawei and other companies in China have been producing AI hardware because they are not allowed to use Nvidia hardware for many applications.

A token is a unit of text processed by an AI model.

Processing the entire Lord of the Rings trilogy plus additional books with a Flash or Nano model could cost approximately a third of a penny per million tokens.

Eli the Computer Guy believes that if a resource like AI tokens is basically free, people will find the least efficient ways to use them.

Eli the Computer Guy questions how AI companies can achieve trillion-dollar valuations when token costs are as low as a third of a penny or 40 cents per million tokens and continue to plummet.

Eli the Computer Guy states that the math for AI company valuations does not add up, comparing it to 'two plus two equal a trillion dollars.'

Eli the Computer Guy asks viewers if they understand how the math for AI company valuations works out to a trillion dollars given the low token processing costs.