DeepSeek seeks $7.4B round at $74B valuation, eyes Shanghai IPO

DeepSeek is seeking $7.4 billion at a $74 billion valuation, up from $50 billion in June, as the Chinese AI lab scales computing infrastructure and prepares for a Shanghai listing next year.

The Wall Street Journal, citing sources familiar with the matter, reported that existing shareholders including Monolith Management, Shixiang, and battery maker CATL (03750.HK) plan to participate. Funds backed by Chinese local government financing platforms are also expected to join the round.

DeepSeek's annualized recurring revenue has reached $500 million, according to the report. The company generated $70.7 million in revenue between January and July 2026 — ten times its full-year 2025 total — with its API business reporting an 82.9 percent gross margin. The new capital will fund research and development and expand computing infrastructure.

The valuation jump from $50 billion to $74 billion in roughly two months reflects accelerating demand for DeepSeek's models and intensifying competition in the Chinese AI market. The company has hired banks and advisers to prepare for a Shanghai listing next year, which would give public market investors exposure to one of China's most prominent AI developers.

Revenue Jumps 10x in Seven Months to $70.7M

DeepSeek's reported revenue trajectory shows how quickly the company has converted technical reputation into commercial scale. The $70.7 million generated in the first seven months of 2026 compares with roughly $7 million for all of 2025, according to data shared by Coin Bureau on X. Annualized revenue now runs between $400 million and $500 million.

The 82.9 percent gross margin on its API business — which lets developers and enterprises integrate DeepSeek's models into their own applications — is comparable to margins reported by Western AI infrastructure providers. OpenAI's API business and Anthropic's Claude platform operate at similar gross margin levels, though neither discloses exact figures publicly. The margin figure is particularly notable because it suggests DeepSeek's inference costs remain competitive despite the company's reliance on Nvidia GPUs, which are subject to US export restrictions targeting China.

Shanghai Listing Would Rank Among China's Largest Tech IPOs

The funding round positions DeepSeek against a crowded field of Chinese AI developers including Alibaba's Qwen, Baidu's Ernie, and ByteDance's Doubao. DeepSeek's open-weight model strategy has differentiated it from rivals that keep proprietary models behind API paywalls, helping it attract a global developer community.

For investors, the round reflects continued confidence in Chinese AI despite export controls on advanced semiconductors from Nvidia and other Western suppliers. CATL's participation as an existing shareholder ties the battery giant's market position to DeepSeek's trajectory, while government-backed funds add a policy dimension to the company's growth story. The involvement of local government financing platforms suggests DeepSeek's expansion aligns with Beijing's broader push for AI self-sufficiency.

The planned Shanghai listing would give Chinese retail investors direct access to DeepSeek's equity for the first time. If the company lists at a valuation near $74 billion, it would rank among the largest tech IPOs in China since Alibaba's 2019 Hong Kong secondary listing. The company has hired banks and advisers to prepare for the listing, though no timeline for the filing has been disclosed.

DeepSeek's rapid valuation growth — from $50 billion in June to $74 billion now — raises questions about whether the market is pricing in sustainable revenue or speculative AI demand. At $500 million ARR, the $74 billion valuation implies a revenue multiple of roughly 148x, far above the multiples typical for established software companies. The company's ability to sustain 82.9 percent gross margins while scaling compute infrastructure will determine whether that premium holds.

This article is for informational purposes only and does not constitute investment advice.