Prior to true AGI, how is AI ever going to be good business?

From a New York Times article about the new AI chatbot from DeepSeek, a Chinese startup:

The DeepSeek chatbot answered questions, solved logic problems and wrote its own computer programs as capably as anything already on the market, according to the benchmark tests that American A.I. companies have been using.
And it was created on the cheap, challenging the prevailing idea that only the tech industry’s biggest companies — all of them based in the United States — could afford to make the most advanced A.I. systems. The Chinese engineers said they needed only about $6 million in raw computing power to build their new system. That is about 10 times less than the tech giant Meta spent building its latest A.I. technology.

After the recent Stargate announcement from the White House where tech leaders, standing with Trump, announced a gargantuan $500 billion investment in "AI infrastructure," I just couldn't help but wonder if all this money being thrown at AI, in this very short period of time, is just going to get torched. It all just feels very hype-y and gold-rush-y.

I don't see how it makes sense from a business perspective, unless the investment directly leads to actual AGI—which is highly unlikely in any reasonably short time frame.

It makes sense from a national security perspective—not wanting to be dependent on foreign countries for critical tech, etc.—but it's just a lot of money, really fast. Not to mention that, for some crazy reason, they have invited possibly the greatest money torcher/bullshit artist in corporate history, Masayoshi Son (the guy who invested billions into WeWork, lol), to help lead the charge.

And now I've just found out about DeepSeek, a Chinese startup that appears to be in the same ballpark as the leading American LLMs/chatbots, who accomplished their feat at a fraction of the cost and using a fraction of the advanced chip tech that we've all been led to believe–thanks to the emerging NVIDIA-industrial complex—is necessary in order to even think about building this stuff.

And yet this comes after years of Sam Altman constantly campaigning, podcasting, begging and instilling this notion throughout the business and tech communities—planting a seed, if you will—that further developments in AI are going to require a level of investment the world has never seen (trillions!). And that if we don't give them this money, we will lose so badly to China in the AI race that they'll beat us to AGI and use it to conquer and enslave us.

Maybe I'm paranoid, but I think there's a good chance that Altman is only spreading this belief that he needs a trillion dollars simply because he wants a trillion dollars. And all these VCs, and Trump, are falling for the psyop. Altman knows better than anyone that the true number one role of the modern tech startup CEO is that of a fundraiser. And, love it or hate it, he who raises the most money—through charisma, networking, appearances on pseudo-intellectual podcasts that rile up the normies, etc.—is the one who wins in the Valley, even if most of the money gets torched in the process. Just ask Adam Neumann and Masayoshi Son.

To really hammer the point home, imagine you've just started a company whose goal is to create the best nail clippers in the world. And you have competition, as you've learned there are some other startups also getting into the nail clippers biz. So, how much money do you want to raise in order to hire top talent and design and make these nail clippers?

Let's say you raise $10 million dollars to design and make these nail clippers—that's a lot of money for such a simple product! But wait, you've now learned your competition has apparently raised $10 billion dollars! In other words, they've outraised you by a factor of one thousand!

Does this scare you? Does this mean that you're totally going to lose now, and you might as well close up shop? No, of course not. You'd laugh your ass off, and be dying to know what in the hell this company could possibly be wasting billions of dollars on in their attempt to build... nail clippers.

The point is, when developing any kind of product, there is a diminishing return on each marginal dollar raised beyond a certain point, once you've already reached the maximum amount of money that can be used (reasonably) productively.

Do these AI startups really need all this money, or are these shifty CEOs just striking the fundraising iron while it's hot, having snake charmed everyone into thinking they're the chosen tech gurus who hold the sole key to the future? Or worse, deep down guys like Altman and Amodei know that OpenAI and Anthropic don't actually have the moat/competitive advantage they pretend to have (e.g. DeepSeek) so they need to raise as much money as they can ASAP before the hype fades and everyone realizes they're not wearing any clothes.

I understand that building AGI may very well take many billions, over time—but trillions, right this second?

I don't know.