Following the DeepSeek shock, Nvidia, known as Wall Street’s top AI beneficiary, plummeted its stock price. However, CEO Jensen Huang remained optimistic, stating on Sunday that the situation was “not bad.”
Huang explained that DeepSeek’s advancement would increase demand for AI.
The sell-off began after news broke that DeepSeek had developed a chatbot that outperformed American competitors while using only about one-twentieth of the AI-specific chips. This revelation triggered a sharp decline in Nvidia’s stock over several days.
At its lowest, Nvidia’s stock had plunged 17%, wiping out approximately $600 billion in market value.
The sell-off was driven by concerns that demand for AI-specific chips would decline. Recently, the stock has rebounded significantly as those fears were deemed exaggerated, but it has yet to surpass its previous peak.
Amid the growing momentum in AI development, CEO Hwang described DeepSeek’s inference-based AI model, R1, as the world’s first open-source model of its kind. He emphasized that making it freely available to both developers and consumers is expected to accelerate demand for AI technologies. Hwang also noted that this surge in AI usage will likely boost demand for specialized AI chips.
Investment bank JP Morgan echoed this optimism, predicting that DeepSeek’s innovation, making low-cost, high-efficiency AI chatbots viable, would attract more small companies to the market, ultimately increasing demand for Nvidia’s chips.
Nvidia is scheduled to announce its quarterly earnings on February 26.