Nvidia CEO Jensen Huang recently stated that the market has misjudged the negative impact of DeepSeek on AI chipmakers. Huang participated in an interview with DataDirect Networks CEO, Alex Bouzari, where they discussed the prospects of DeepSeek’s R1 model.
Jensen Huang described DeepSeek’s R1 model as “incredibly exciting.” However, he emphasized that the market’s reaction to DeepSeek is somewhat misplaced. He remarked, “I think the market responded to R1, as in, ‘Oh my gosh. AI is finished.’” He further explained that the market believed computing was no longer necessary, while in reality, “It’s [the] complete opposite.”
Nvidia’s CEO clarified that the release of the R1 open-source reasoning model is actually advantageous for the broader AI industry and will enhance the adoption of AI technology. However, this does not imply that the market no longer requires hardware resources such as those developed by Nvidia. He added, “It’s making everybody take notice that, okay, there are opportunities to have the models be far more efficient than what we thought was possible.” This realization is expected to accelerate and expand AI adoption.
Despite DeepSeek’s efforts to reduce the cost of training models and its significant advancements in pre-training AI models, hardware and computational resources remain essential for post-training. In fact, post-training continues to be a crucial component of AI development. Huang stated, “Reasoning is a fairly compute-intensive part of it.”
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Nvidia’s stock has recovered after its initial reaction to DeepSeek’s disruption
Initially, when DeepSeek launched its R1 open-source model, it triggered a ripple effect across the entire AI market. Consequently, Nvidia’s stock plummeted by 16.9% in a single day following the news of DeepSeek’s cost-effectiveness. On January 24, Nvidia’s stock closed at a price of $142.62. However, by January 27, it had already dropped to $118.52 per share, resulting in an approximate loss of $600 billion within three days. At press time, its stock is priced at $134 per share.
Source: Google Finance
Since then, Nvidia’s stock has nearly recovered. Its stock opened at $140 per share on Friday, reflecting a full recovery over the course of a month. On February 26, Nvidia is scheduled to report its Q4 earnings, which is anticipated to further enhance its market position. Concurrently, DeepSeek announced that it will release its open-source code repositories in the coming week.
DeepSeek stated in an announcement, “We’re a tiny team exploring AGI. Starting next week, we’ll be open-sourcing five repos, sharing our small but sincere progress with full transparency.” The goal is to enable developers and researchers to download and build upon its open-source code. As part of this initiative, DeepSeek will release five repositories, representing a significant move considering that other competitor companies like OpenAI and Anthropic are quite secretive about their data, models, and repositories.
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