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The Monday market opening triggered an 15% slide in Nvidia (NVDA, Financial) stock due to investors' growing doubt about major investments in AI technology following China's DeepSeek R1 AI system launch.
The Chinese quant fund High-Flyer deployed DeepSeek R1 as a large-language model investment that competes against ChatGPT and Meta (META, Financial) systems but handles much lower capital assets. The modelling at DeepSeek relied on 50,000 H100 GPUs while NVIDIA's advanced processor range includes older H100 GPUs.
The data-efficient large-language model development methods of DeepSeek create doubts within the industry regarding decreased expenses for data centers and high-end AI chips. The new cost evaluation model tracked by Yardeni Research analysts showed promise for lower technological fees but offered possibilities of diminished NVIDIA product demand.
DeepSeek's method shows Chinese innovation developing new tools that bypass U.S. export controls according to JPMorgan analysts who did not believe this indicated broader industry changes. Research analyst data showed AI budgets remain intact at substantial levels.
This article first appeared on GuruFocus.