DeepSeek Slashes V4 Pro Model Price by 75%, Undercuts Big Tech
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
artificial-intelligenceai-pricing
Fazen Markets Editorial Desk
Collective editorial team · methodology
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A major price war in generative artificial intelligence intensified this week. DeepSeek announced on 23 May 2026 that it will implement a permanent 75% price reduction for its newly launched V4 Pro foundation model. The strategic discount applies immediately to new users and is structured to undercut comparable offerings from OpenAI's GPT-4o and Anthropic's Claude 3.5 Sonnet by a significant margin. This aggressive pricing move places immediate pressure on the profitability of established AI labs and could accelerate enterprise adoption timelines by lowering total cost of ownership for scaled deployments.
The generative AI market has reached an inflection point where performance differentiation between top-tier models has narrowed. The last comparable major price cut occurred in February 2025, when Google reduced the cost of its Gemini Ultra API by 40% following Meta's Llama 3 release. The current macro backdrop features elevated interest rates, with the 10-year Treasury yield at 4.31%, pressuring tech valuations and forcing a renewed focus on unit economics for cash-intensive AI startups. What changed to trigger DeepSeek's move now is the successful completion of its V4 Pro training cycle, achieving performance benchmarks that meet or exceed frontier models on key reasoning and coding tasks, as reported by independent evaluators. This technical parity allows the firm to compete directly on price, a lever it is pulling ahead of anticipated summer 2026 product cycles from OpenAI and Google.
The new pricing sets DeepSeek's V4 Pro input cost at $0.15 per 1 million tokens and output at $0.60 per 1 million tokens. That represents a direct 75% reduction from its previous V3.5 Turbo pricing of $0.60/$2.40 per million tokens. The table below shows the immediate competitive displacement.
| Model | Input Cost ($/1M tokens) | Output Cost ($/1M tokens) |
|---|---|---|
| DeepSeek V4 Pro | 0.15 | 0.60 |
| OpenAI GPT-4o | 2.50 | 10.00 |
| Anthropic Claude 3.5 Sonnet | 3.00 | 15.00 |
DeepSeek's new pricing is 94% cheaper than GPT-4o for input and output. The company's last funding round in late 2025 valued it at $18 billion. This discount strategy aims to capture market share rapidly, targeting a goal of 10 million daily active API users by year-end 2026, up from an estimated 2 million currently. The price cut comes as the Nasdaq-100 Technology Sector Index (NDXT) shows YTD gains of 8%, largely driven by hardware and semiconductor firms like Nvidia, while pure-play AI software valuations have stagnated.
The immediate second-order effect is margin compression for incumbent AI service providers. Publicly traded software firms with heavy reliance on OpenAI or Google Cloud for AI features, such as Salesforce (CRM) and Adobe (ADBE), could see a 3-5% reduction in their cloud AI operating costs if they switch providers, boosting their own operating margins. Conversely, cloud infrastructure providers like Microsoft Azure (MSFT) and Google Cloud (GOOGL) face near-term revenue per unit pressure as customers demand lower AI inference costs. A key limitation is DeepSeek's current lack of an integrated multimodal vision model, which remains a competitive advantage for GPT-4o in certain enterprise applications. Positioning data shows hedge funds and quant firms are increasing short exposure to pure-play AI software names with high customer acquisition costs while going long on semiconductor manufacturers like Nvidia (NVDA) and Advanced Micro Devices (AMD), which benefit from increased inference volume regardless of which model wins.
Market participants should monitor OpenAI's Developer Day, scheduled for 15 July 2026, for a potential strategic pricing response. The next key catalyst is Google's I/O conference in early June, where Gemini 2.0 pricing will be a focal point. Support levels to watch include the $140 billion market cap threshold for Microsoft's Intelligent Cloud segment; a break below could signal sustained margin pressure. For DeepSeek, the critical level is its monthly active developer count, which needs to sustain 50% quarter-over-quarter growth to justify its valuation. The firm's next funding round, anticipated in Q4 2026, will serve as a litmus test for investor confidence in its low-margin, high-volume strategy.
Retail users of consumer-facing AI applications may not see immediate direct price changes, as most apps operate on subscription models. However, the competitive pressure will likely force downstream app developers like ChatGPT Plus, Midjourney, and Claude Pro to either lower subscription fees or significantly enhance feature sets without price hikes within 6-12 months to retain users, indirectly passing on the cost savings.
According to widely cited benchmarks from LMSys Chatbot Arena and the Hugging Face Open LLM Leaderboard, DeepSeek V4 Pro matches or slightly exceeds GPT-4o on complex reasoning, mathematics, and code generation tasks. It currently lags in multimodal capabilities like image understanding and real-time web search integration, which are areas OpenAI and Google still lead. The performance parity on core text tasks is what enables the price competition.
The current discount follows a pattern established over the last two years. OpenAI cut GPT-3.5 Turbo prices by 25% in March 2024. Google responded with a 40% cut to Gemini in February 2025. These moves typically occur 6-9 months after a new model generation achieves technical parity, shifting competition from features to economics. DeepSeek's 75% cut is the largest single reduction in the sector's history, indicating an accelerated timeline for AI becoming a commodity utility.
DeepSeek's drastic price cut transforms AI from a premium feature into a low-margin utility, threatening incumbent business models.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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