Nvidia’s stock price took a significant hit last week after Chinese tech company DeepSeek announced the development of an AI chatbot that requires much less computing power than existing models. This development poses a threat to Nvidia’s market position, as it reduces demand for the company’s high-end GPUs.
According to one investor, MMMT Wealth, DeepSeek’s efficient AI model challenges Nvidia’s premium valuation and future demand assumptions. The investor believes that this new technology will lead to decreased spending by hyperscalers, more affordable chip models, and increased competition from AMD.
Moreover, many of Nvidia’s major customers are investing in their own custom chips, which raises questions about the company’s business viability. Additionally, generic AI software may erode Nvidia’s industry-leading CUDA software, making it easier for tech companies to run their hardware on alternatives.
Despite this, Wall Street remains bullish on Nvidia, with 37 out of 40 analysts recommending a Buy and giving the stock a Strong Buy consensus rating. However, one investor warns that it will be challenging for Nvidia to fend off competitors in the midst of a tech revolution.
Source: https://www.tipranks.com/news/is-deeptrouble-looming-for-nvidia-stock-heres-what-this-investor-expects