Nvidia, the AI chip king, has taken a constructive view on Chinese company DeepSeek’s achievement in designing an AI chatbot comparable to OpenAi’s ChatGPT. Despite a $600 billion market cap hit for Nvidia following the news, analysts argue that DeepSeek’s breakthrough could represent an opportunity for the entire AI market.
DeepSeek’s chatbot, which was trained using less powerful GPUs and cost just $5.6 million, has raised questions about the validity of its design process. However, Nvidia has praised the advancement, saying it illustrates how new models can be created leveraging widely available models and compliant compute. The company also sees DeepSeek as an opportunity to demonstrate its chips’ usefulness in China, a significant revenue driver.
Analysts largely agree that DeepSeek’s rise presents an opportunity for the broader AI trend, rather than a threat to Nvidia’s dominance. Daniel Newman of The Futurum Group said the sell-off was an overreaction, as more efficient use of compute could lead to cheaper models and increased earnings per share. Meta Platforms’ AI spending may also benefit if some of this spending is not necessary.
Despite the market volatility, experts believe that companies like Nvidia with vast resources will find ways to adapt and thrive in the AI landscape. However, investors should be cautious, given Nvidia’s high multiples trading at a premium in a bull market that has lasted over two years. Those planning to hold onto the stock for 10-20 years may want to consider buying now, but the near-term ride could be bumpy.
Source: https://www.fool.com/investing/2025/02/03/nvidia-says-chinas-deepseek-is-excellent-ai-advanc