DeepSeek has proven that affordability can still yield high margins. GLM has demonstrated that Chinese models can be profitable. KIMI has shown that Chinese models can also command premium prices. The majority of capital expenditures by U.S. cloud providers stem from orders by Anthropic and OpenAI. - Initially, Anthropic and OpenAI’s demand exceeded supply, meaning global compute capacity was insufficient. - The logic then shifted to Meta and SpaceX selling compute resources to Anthropic and OpenAI, who lacked capacity. - Now, the cost-performance ratio of Chinese models is eroding Anthropic and OpenAI’s market share, while newcomers like Grok and Meta are catching up rapidly. As a result, the compute gap for these two companies is narrowing, and their capital spending may soon pause. Only the very top few models will face compute shortages, but market share is increasingly being captured by new entrants—leading to a potential slowdown in total capital expenditures by U.S. giants.