Actions of Nvidia (Nvda 1.71%)) underwent a two-digit drop in January, mainly due to the threat of the start-up of Chinese artificial intelligence (AI) Deepseek.
AI shares plunged on January 27 while investors reacted to the new Deepseek R1 chatbot and the 22-page Deepseek search document which explained engineering and technology behind the Open-Source à à à à-Source model cost. Among other things, Deepseek said that it only cost $ 5.5 million to form the model, a tiny fraction of the billions that Nvidia customers paid for components that perform AI chatbots as chatgpt.
According to data from S&P Global Market IntelligenceThe title ended the month down 11%. As you can see in the table below, Nvidia was in green for most of the month until In depth The news sank the stock.
What the new Deepseek for Nvidia means
The Nvidia stock dropped by 17% on Monday, January 27 in an unprecedented bloodbath in the AI sector. In fact, it was the worst loss of value of a dollar for a single stock in history, because Nvidia abandoned around $ 600 billion in market capitalization.
The title initially recovered some of these losses, but on February 3, it was negotiated below its closing price on January 27 in part because of the fears concerning the prices.
With the sale in NVIDIA shares, investors bet that the much cheaper architecture of Deepseek could considerably change the economy through industry, either the demand for cutting -edge components of Nvidia, or downward prices, according to This, according to this argument, it is not necessary to spend billions to do what Deepseek could do for millions.
It is still too early to find out what is the long -term impact of Deepseek, and there is a debate on the quantity in advance of its technology. Openai accused the company of “distilling” its model, mainly using it to form its own model, which means that its work was not original.
A spokesperson for Nvidia has granted a Deepseek credit for the realization, calling it “an excellent progression of AI”.
Image source: Getty Images.
Is Nvidia a purchase?
Some analysts are skeptical about the fact that Deepseek will considerably change the demand for Nvidia chips or the current AI path, noting that most American companies did not want to give their data to a Chinese start-up.
However, the model is already adopted in certain corners. He is now available on Microsoft Azure, and Meta-platforms Seeking to apply Deepseek advances to its own AI models.
At this stage, it is too early to say what is the long -term impact of Deepseek, but Nvidia is a resilient and adaptable enterprise, and it can adapt to maintain its leadership in the ia fleas.
In addition, Deepseek could accelerate AI demand by making technology cheaper. Overall, it is an error to raft Nvidia here, and chip titan could be a beneficiary of the long -term depth disturbance.
Randi Zuckerberg, former Director of Development of the Facebook and Sister of the CEO of Meta Platforms, Mark Zuckerberg, is a member of the board of directors of Motley Fool’s. Jeremy Bowman To positions in the Meta and Nvidia platforms. The Motley Fool has positions and recommends Meta, Microsoft and Nvidia platforms. The Motley Fool recommends the following options: Long January 2026 Calls $ 395 on Microsoft and Court January 2026 405 $ calls Microsoft. The Word’s madman has a Disclosure policy.