Investing.com– Shares of NVIDIA Corporation (NASDAQ:) fell more than 5% in 24-hour trading, RobinHood data showed late Sunday, amid growing questions about the need for major investment spending in artificial intelligence after the publication of the Chinese DeepSeek study.
Nvidia slipped 5.2% to $135.20 indicated, according to RobinHood data, with shares extending a 3.2% loss from Friday.
The AI darling has been rocked by the release of DeepSeek R1, a big-language model that claims to rival offerings from ChatGPT and Meta (NASDAQ:) while using a fraction of their budgets.
DeepSeek, funded by Chinese quantitative fund High-Flyer, reportedly had access to around 50,000 Nvidia H100 AI GPUs, from the latest generation of advanced AI chips.
DeepSeek’s release raised concerns that tech companies could adopt simpler, more capital-efficient approaches to AI development, requiring lower capital expenditures for data centers and advanced AI chips.
Analysts at Yardeni Research said that while big tech companies could take inspiration from DeepSeek to design cheaper AI systems, “this might not be a happy development for Nvidia.”
JPMorgan analysts said concerns about higher budgets for AI were “overblown”, adding that DeepSeek’s effectiveness was more due to necessity, particularly in light of strict US export controls on AI. Chinese chip industry.
Six of Wall Street’s Magnificent 7 companies, which make up the bulk of Nvidia’s biggest customers, are expected to report quarterly results this week and are expected to announce increased capital spending on AI development.
AI giant OpenAI also announced a $500 billion joint investment in US AI infrastructure last week.