Nvidia’s stock is trading 17% lower at $118.14 after the announcement from the Chinese AI startup DeepSeek about their new AI model R1, which is more efficient and achieved similar capabilities with less capital (about 6 million) and resources.
DeepSeek’s efficiency might lead to a lower demand for computing power affecting Nvidia’s leading market position. The stock market reacted to the news that DeepSeek might have more Nvidia GPUs than claimed, suggesting a possible oversupply or less demand for Nvidia’s products in the future.
Nvidia’s stock also faced pressure from profit-taking after a significant run-up soaring by 100% in the last twelve months in its stock price, which had attracted momentum buyers.
A fresh outlook from supplier SK Hynix cast doubt over future demand for Nvidia’s products, contributing to the stock’s decline.
Cantor Fitzgerald came up with a report which reiterates NVIDIA NVDA stock at Overweight and maintains the price target at $200.
Nvidia lost almost $580 billion in market cap today, the largest in market history.
Nvidia released a statement regarding DeepSeek: “DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling. DeepSeek’s work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant. Inference requires significant numbers of NVIDIA GPUs and high-performance networking. We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling.”
Nikolas has been involved in the finance industry for over fifteen years spanning across Europe and USA with a depth of knowledge and experience within many aspects of the financial markets. Nikolas gained several years experience with some of the Europe’s leading Brokers, as equity analyst, and trader managing accounts for both Private and Corporate Investors. He enjoys both the fundamental and technical aspects of trading focusing on stock markets and all FX majors. Currently, Nikolas provides analysis and comments to online financial publications. Educational background in Economics (BSc), and Finance (MSc).
