Just after Chinese artificial intelligence startup DeepSeek rocked global technology stocks on Monday, NVIDIA Corp. has shown support for DeepSeek’s latest AI model, which has generated significant buzz in the AI community. While NVIDIA sees this as a promising leap forward, the broader market has mixed opinions on DeepSeek’s cost-effective strategy and its possible disruption of established players in the AI space.
In a statement to Bloomberg, NVIDIA praised the innovations from the China-based AI company, describing them as an ‘excellent AI advancement’, noting the company’s approach as a new way to develop models based on widely available resources. This approach marks a significant shift in how AI models can be developed and deployed.
NVIDIA has specifically highlighted DeepSeek’s R1 model, categorising it under a concept known as Test Time Scaling. This process involves utilising additional computational resources during the inference phase of AI models to enhance performance. As these models require substantial computational power, this could lead to increase in demand for hardware.
The biggest provider of chips used to train artificial intelligence software believes that advances like DeepSeek’s could pave the way for new opportunities in the inference phase of AI, an area where NVIDIA already plays a significant role with its GPUs and high-performance networking products.
With this positive outlook, Citi has reiterated its ‘Buy’ rating for NVIDIA, signaling confidence in the future of AI advancements. Citi also believes that major AI companies will continue relying on advanced GPUs.
However, market sentiment around DeepSeek’s success has been mixed. UBS has raised concerns about the potential impact of DeepSeek’s lower-cost models on the broader AI landscape. DeepSeek has reportedly trained its models at significantly lower costs than leading competitors, a move that has raised questions about pricing and the sustainability of big tech’s high capital expenditure. While the models have shown strong early results, concerns remain regarding their long-term viability and transparency.
UBS remains cautious, recommending that investors stay calm and monitor upcoming tech company earnings for further insight.
In another note on Tuesday, Citi said that DeepSeek is a challenge to the US exceptionalism narrative, questioning the dominance of the ‘Magnificent 7’ tech giants, particularly as the Nasdaq’s momentum weakens.
In this scenario, Chinese and UK equities could outperform, while tech- and commodity-heavy markets may lag, it said in a note on Tuesday. Additionally, the underperformance of US equities could lead to a bounce in the USD and US rates, prompting Citi to maintain long USD positions in its portfolio.
The potential downside risks, according to Citi, are most pronounced for independent power producers like Constellation and NRG Energy, which have factored in high future demand for power from hyperscalers. Furthermore, regulated utilities with exposure to data center growth in states like Georgia, Texas, and Ohio may also face challenges if AI demand doesn’t materialise as expected.
The overall sentiment suggests that while DeepSeek’s success could accelerate AI adoption, it is still too early to make definitive conclusions about its long-term impact on the industry.
. Read more on Technology by NDTV Profit.The overall sentiment suggests that while DeepSeek’s success could accelerate AI adoption, it is still too early to make definitive conclusions about its long-term impact on the industry. Read MoreTechnology, Business
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