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Nvidia Responds to Getting Hit in Face With Shovel

Jan 27, 2025 - futurism.com
Nvidia has experienced a historic single-day stock loss following claims by Chinese startup DeepSeek that its AI chatbot rivals OpenAI's offerings at a fraction of the cost. DeepSeek's open-source, free-to-use model has caused significant disruption in the tech industry, leading to a global selloff and contributing to a projected $1 trillion loss in the tech sector. Despite the financial impact, Nvidia has responded positively, acknowledging DeepSeek's advancements in test-time scaling, a technique used by both DeepSeek and OpenAI to improve AI model reliability.

DeepSeek's use of a capped version of Nvidia's H100 AI chip, the H800, despite US export bans, has further complicated the situation. The announcement has raised concerns about overspending in the AI industry, with investors questioning the profitability of generative AI. Analysts suggest that if DeepSeek's claims of lower model training costs are accurate, it could benefit consumer app companies and reduce long-term AI-related revenues and costs for hyperscalers. Nvidia's stock has not yet recovered, and OpenAI's CEO Sam Altman has remained silent as DeepSeek's app surpasses ChatGPT in popularity.

Key takeaways:

  • Nvidia experienced a record-breaking single-day stock loss due to the rise of Chinese startup DeepSeek and its AI chatbot.
  • DeepSeek's AI chatbot, which is open source and free, claims to rival OpenAI's offerings at a fraction of the cost, causing industry-wide disruption.
  • DeepSeek uses a capped version of Nvidia's H100 AI chip, the H800, despite US export bans, adding complexity to the situation.
  • Investors are questioning AI spending and profitability, with some analysts seeing potential cost benefits from DeepSeek's advancements.
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