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We recently compiled a list of the 10 Important AI News and Ratings for Today. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other AI stocks.
DeepSeek, a Chinese AI startup, claims to have developed a GPT-4-level model at a fraction of the usual cost, spending just around $6 million. It has emerged as a significant disruptor in the AI landscape, showing its ability to deliver high-performing models like R1 with remarkable efficiency in terms of time, cost, and hardware. Its open-source approach has contributed to its rapid adoption and has allowed developers worldwide to refine and expand its capabilities. The model’s success raised questions about traditional AI development methods, especially the reliance on expensive, high-powered chips.
DeepSeek's Impact on AI Chips Viewed as Limited by Experts
On January 27, the tech stocks felt huge aftershocks from the news, and major tech indices fell significantly. However, many experts have a different opinion. BofA downplayed concerns about reduced AI semiconductor demand following DeepSeek's release of its R1 model, which reportedly outperforms leading Western AI models like GPT-4 while being developed with minimal resources.
While the model's efficiency could suggest a reduced need for high-end AI chips, BofA believes this worry is overstated. The R1 model likely relies on foundational models like Meta's Llama, where most infrastructure costs occur. Llama’s parent’s plans to increase 2025 capex by over 56% to $60-$65 billion highlight the rising demand for compute resources. BofA expects growing compute needs driven by foundational models, derivative techniques, and large-scale AI inference.
Furthermore, Wedbush analyst, Dan Ives called it a buying opportunity for American tech stocks. He wrote in a post on X:
“DeepSeek is a competitive LLM model for consumer use cases…launching broader AI infrastructure a whole other ballgame and nothing with DeepSeek makes us believe anything different. It’s about AGI for Big Tech and DeepSeek’s noise. Also no US tech using this tech. Buying oppy.”
For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).