NVIDIA (NASDAQ: NVDA) stock plunged more than 10% on news from China AI that rocked the AI world. The launch of DeepSeek raises questions about the cost of computing and NVIDIA’s position in the data center and AI industry, but take it with a grain of salt. DeepSeek’s claim to have cost only $6 million is disputed by experts and unverifiable. There’s no telling how much money went into the project to get it to the point of only costing $6 million, and other factors are in play. DeepSeek’s founder and principal funder, Liang Wenfend, has ties to the Chinese government and reason to skew the data, given the escalating technology war between China and the U.S.
The flip side is that China’s advances in AI technology are offset by the United States' dominant technological position. While the advent of lower-cost models may have a near-term impact on the market, the longer-term outlook is solid. The advancement of AI will be driven across the stack, including chip advancement, and NVIDIA is the critical player. Not only are its chips central to the AI boom, but its CUDA operating platform is also essential. It unlocks and harnesses GPU power for AI development; major updates will be forthcoming.
