Nvidia’s stock saw a dip on Monday as investors assessed the potential impact of DeepSeek, a Chinese AI start-up, launching its new open-source AI models. The release of DeepSeek R1, which claims to rival major AI models like OpenAI’s ChatGPT at a fraction of the cost, raised concerns about the future investment landscape for AI infrastructure.
AI Investment Concerns Shake Nasdaq Futures
The tech-heavy Nasdaq futures slipped as investors questioned whether the massive capital expenditures in AI infrastructure—reaching hundreds of billions of dollars—are sustainable in the long run. DeepSeek’s model reportedly delivers similar performance to top AI products but at significantly lower costs, prompting fears that companies may scale back AI infrastructure investments, which could impact chipmakers like Nvidia (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO).
Analysts Weigh In on DeepSeek’s Impact
Bernstein analysts acknowledged DeepSeek’s model as impressive, noting its ability to compete with OpenAI and Meta’s AI offerings. However, they suggested that the market’s reaction may be overblown, pointing out that AI model costs are already on a steep trajectory.
“If DeepSeek has lowered costs by 10 times, we must also consider that AI model costs have been rising at a similar rate every year,” Bernstein analysts said in a note. They added that cost reduction is necessary for AI advancements and that DeepSeek could optimize existing hardware performance rather than reduce the need for infrastructure investments.
Nvidia’s AI Future Remains Strong, Say Analysts
Despite short-term concerns, Bernstein maintains an “outperform” rating on Nvidia and Broadcom, highlighting that AI infrastructure demand is still rising. The firm dismissed “doomsday scenarios” circulating on social media, reassuring investors that Nvidia’s **
