"Are AI Stocks Really Overpriced?"... A Closer Look at DeepSeek's Price Hike Reveals a Twist [Weekend Money]

DeepSeek Announces API Price Hike
"Significant Increase Difficult...Primarily for Securing Funds"
Benefits From Token Price Cuts Extend to Physical AI

Chinese artificial intelligence (AI) company DeepSeek has announced plans to raise its prices. Earlier this year, Chinese AI firms led a wave of token price cuts, and with major U.S. tech companies joining the price war, the market is now focused on whether the era of AI price competition is drawing to a close.

On August 9, 2026, a customer at the AGI Bar in Zhongguancun, Beijing, China, is using a mobile phone in front of the menu board. While American AI companies engage in fierce competition with Chinese rivals, this AI-themed bar offers free access to DeepSeek. Photo by Yonhap News Agency

On August 14, KB Securities analyzed that the latest price increase is less the end of token price competition and more a transition from an 'ultra-low-price strategy' to a 'low-price strategy.' Because China continues to promote AI as a broadly accessible public good, a price hike alone is unlikely to end the oversupply of Chinese AI services.

On August 6, DeepSeek announced via its official API website that it intends to significantly raise the prices of its AI models. However, it did not disclose the specific timing of the increase or the price change rate for each model.

Building of Chinese startup DeepSeek located in Beijing, China. Photo by Yonhap News

The main point is the purpose behind the price increase. KB Securities believes DeepSeek's primary motivation is not to increase annual recurring revenue (ARR), but instead to secure computing power. DeepSeek is reportedly working on building a 1GW data center in Inner Mongolia. This suggests the price hike is aimed more at raising funds for large-scale infrastructure investment, rather than simply improving profitability.

The scale of the price increase is expected to remain limited. In order for DeepSeek V4 Pro to match the price level of inexpensive U.S. models, the price would need to be raised by more than three times. However, KB Securities expects the actual increase to be no more than double. Researcher Ryu Ho-seung at KB Securities explained, "Because DeepSeek supplies its models under an open-weight format, if it raises its API prices excessively, other AI service providers could use DeepSeek models to offer tokens at a lower price," adding, "if DeepSeek raises prices too much, it risks undermining its own competitiveness."

Ultimately, this increase is interpreted as DeepSeek shifting from an ultra-low-price strategy to a low-price strategy. KB Securities identified three key aspects to monitor going forward. First, the difference in the rate of price increases between V4 Flash and V4 Pro. If the increase is greater for Flash, it implies DeepSeek is maintaining its low-price strategy; if the increase is greater for Pro, it may signal a weakening of that strategy. Second, the price increase rate for cache hits. If charges in this area rise more than expected, it may disrupt the low-price structure. Third, whether the peak and off-peak system remains in place. If DeepSeek stops distinguishing between usage at different times, the impact of the price hike could prove limited.

In conclusion, DeepSeek’s price increase should be seen not as the endpoint of the AI price war, but as more of an interim adjustment. Researcher Ryu explained, "For the time being, there will continue to be an oversupply of Chinese AI," adding that "the ongoing cycle of token price reductions led by China will have a positive impact on on-device services."

This content was produced with the assistance of AI translation services.