Nvidia Shares Fall 5% As China’s DeepSeek Raises Questions About AI Capital By Investing.com
Investing.com– Shares of NVIDIA Corporation (NASDAQ: ) fell more than 5% in 24-hour markets, RobinHood data showed on Sunday night, amid growing questions about the need for big capital investments in artificial intelligence following the announcement by China’s DeepSeek.
Nvidia slipped 5.2% to an indicative $135.20, RobinHood data showed, extending the stock’s 3.2% loss since Friday.
The AI enthusiast was upset by the release of DeepSeek R1 – a multi-language model that claims to rival the offerings of ChatGPT and Meta (NASDAQ: ) while using a fraction of their budgets.
DeepSeek – funded by Chinese quantitative fund High-Flyer – reportedly had access to around 50,000 of Nvidia’s H100 AI GPUs, which are from the latest generation of advanced AI chips.
DeepSeek’s announcement raised concerns that tech companies could adopt smaller, more capital-efficient approaches to AI development, which would require lower capital expenditures for data centers and advanced AI chips.
Analysts at Yardeni Research said that while major tech companies could learn from DeepSeek to design cheaper AI systems, “it may not be a happy development for Nvidia.”
JPMorgan analysts argued that concerns about higher AI budgets were “overblown,” adding that DeepSeek’s performance came more out of necessity, especially in light of tight U.S. export controls on China’s chip industry.
Six of Wall Street’s so-called Magnificent 7 firms — which make up the majority of Nvidia’s biggest customers — are due to report quarterly earnings this week and are expected to announce increased investment in artificial intelligence development.
AI giant OpenAI also announced a $500 billion joint investment in US AI infrastructure last week.
