Nvidia, a leading company in artificial intelligence (AI) technology, broke a questionable record on Wall Street on Monday, January 27.
As per Forbes, this situation arises as DeepSeek, a Chinese AI company, introduced a rival to ChatGPT at a much lower cost.
The release of this model challenges US leadership in generative AI.
At first, this may not seem like bad news for Nvidia, as DeepSeek used Nvidia’s GPUs to train the model.
But DeepSeek claimed it spent only $5.6 million on Nvidia’s technology to develop the model.
Nvidia’s success largely depends on the high demand for its expensive GPUs from major US companies like Meta, Tesla, and OpenAI.
According to the outlet, this demand has caused Nvidia’s profit to soar, growing from $4.8 billion in 2022 to an estimated $66.7 billion in 2024.
Nvidia’s stock value dropped by nearly $600 billion on Monday.
One concern, echoed by Ed Yardeni of Yardeni Research, is that if other companies learn to build advanced AI models at lower costs, Nvidia’s rapid rise in stock value could be at risk.
Meanwhile, Nvidia’s spokesperson called DeepSeek’s model an “excellent AI advancement” which is “fully export control compliant” while still requiring “significant numbers” of Nvidia’s graphics processing units (GPUs).
