A new Chinese chatbot called DeepSeek has sent shockwaves through the tech sector, with semiconductor companies taking a hit. Developed by DeepSeek’s makers for less than $6 million, the system boasts performance benchmarks equal to or better than leading chatbots. The AI Assistant quickly became the most downloaded free app in the US on Apple’s App Store, dethroning OpenAI’s ChatGPT.
Nvidia, an AI chipmaker, saw its shares drop 17% after DeepSeek debuted, wiping out $600 billion of the company’s value. However, analysts at Morgan Stanley say this is a buying opportunity and maintained Nvidia as their top pick with an overweight rating and $152 price target on the shares.
The firm concluded that DeepSeek creates headwinds around export controls but believes near-term checks are firming up for Nvidia’s Hopper and other products. Citi also kept a buy rating on Nvidia, citing supply chain indications and expectations of in-line results.
Lawmakers introduced a bipartisan bill to ban DeepSeek’s chatbot application from government-owned devices due to security concerns. The bill is similar to legislation banning TikTok from government devices. Governments across Asia, including South Korea and Australia, are restricting the use of DeepSeek’s AI services due to security concerns.
Despite these fears, industry analysts believe that U.S. technology companies will continue to spend hundreds of billions of dollars on AI infrastructure in the coming years. Microsoft, Meta, Alphabet, and Amazon accounted for $170 billion of capex spending on AI infrastructure through the third quarter of 2024. AI spending is expected to exceed a quarter trillion dollars in 2025.
Analysts see DeepSeek as a wake-up call for tech giants to optimize their models and remain vigilant in pursuing efficiencies. Penn Mutual Asset Management stated that the arrival of DeepSeek does not change the plans of major technology companies to invest heavily in AI infrastructure.
Source: https://finance.yahoo.com/news/analyst-reboots-nvidias-stock-price-010700834.html