What Does Chinese AI Start-Up DeepSeek Mean for Nvidia Stock? – The Motley Fool
DeepSeek, a Chinese artificial intelligence (AI) start-up, is sending shock waves through the U.S. tech sector by demonstrating its latest AI assistant, which achieves performance comparable to or even surpassing some of the world’s best chatbots.
The kicker here is that DeepSeek reportedly accomplished this using significantly less computational power, relying on fewer and less advanced AI chips — particularly Nvidia‘s (NVDA -3.67%) cutting-edge GPUs, which are typically considered essential for such tasks.
This development suggests a potentially disruptive method for developing large language models (LLMs), offering a more efficient alternative to current strategies. It raises questions about future infrastructure investments and the demand for AI chips.
The market’s reaction has been swift: As of this wriging, Nvidia’s stock has plunged more than 22% from its recent peak, with similar declines in other leading AI tech stocks.
Let’s explore what DeepSeek’s emergence could mean for Nvidia and how it might affect investors’ portfolios.
The innovation behind DeepSeek’s success
Artificial intelligence is not only a major theme in technology but also a national security issue, given its pivotal role in areas like data analysis, intelligence, and military applications. This has led the United States to impose bans or severe restrictions on exporting high-end technologies, such as specialized AI semiconductors, to China since 2023, aiming to slow the country’s technological progress and safeguard crucial supply chains.
