Investing.com – Shares of NVIDIA Corporation (NASDAQ:) fell over 5% in 24-hour markets, data from RobinHood showed on Sunday evening, amid growing questions about the need for greater investment in artificial intelligence after the release from China’s DeepSeek.
Nvidia slipped 5.2% to trade at $135.20, data from RobinHood showed, with shares extending a 3.2% loss from Friday.
The AI darling has been rocked by the release of DeepSeek R1 – a large-language model that claims to compete with the offerings of ChatGPT and Meta (NASDAQ:), despite using only a fraction of their budget.
DeepSeek – which is funded by Chinese quant fund High-Flyer – reportedly had access to around 50,000 of Nvidia’s H100 AI GPUs, which are the latest generation of advanced AI chips.
DeepSeek’s release raised concerns that tech companies could adopt leaner, more capital-efficient approaches to AI development, which would require lower capital spending on data centers and advanced AI chips.
Analysts at Yardeni Research said that while major tech companies could learn from DeepSeek to develop cheaper AI systems, “this may not be a happy development for Nvidia.”
Analysts at JPMorgan argued that concerns about higher AI budgets are “overblown,” adding that DeepSeek’s efficiency comes more from necessity, especially given strict U.S. export controls on China’s chip industry.
Six of Wall Street’s so-called “Magnificent 7” companies – which make up a majority of Nvidia’s largest customers – are expected to report quarterly results this week and are widely expected to announce increased investment in AI development.
AI giant OpenAI also announced a $500 billion joint investment in US AI infrastructure last week.
