DeepSeek has sent shockwaves through the AI industry with the release of an open-source version of its R1 model. This development significantly impacted Nvidia, whose stock price plummeted by 16.9% in a single day, erasing $600 billion from its market capitalization over just three days. Nvidia's stock, which opened at $140 a share on Friday, experienced a rapid decline, closing at $118.52 a share on January 27. Despite the initial setback, the company managed to regain almost all its lost value within a month, closing at $142.62 a share on January 24.
The market's reaction to DeepSeek's R1 model release appeared disproportionate, focusing its effects heavily on Nvidia. Jensen Huang, Nvidia's founder and CEO, expressed his views on this reaction, stating that the market misunderstood the implications of DeepSeek's advancements.
"I think the market responded to R1, as in, 'Oh my gosh. AI is finished,'" – Jensen Huang
Huang remains optimistic about the technological developments presented by DeepSeek's R1 model, describing it as "incredibly exciting." Despite acknowledging the potential of more efficient models, he emphasized that post-training will continue to play a crucial role in AI development due to its resource-intensive nature. The reasoning phase of AI, a compute-intensive process, remains essential despite advancements in pre-training models.
"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," – Jensen Huang
Looking ahead, DeepSeek plans to continue its open-source initiatives by releasing five code repositories as part of an "open source week" event next week. This move is expected to further propel advancements in AI technology and potentially influence market dynamics once again.
Nvidia is set to report its Q4 earnings on February 26, a report that will likely address the recent market reaction and provide further insights into how the company plans to navigate these changes. Investors and industry experts await this announcement to gain a clearer understanding of Nvidia's future strategies in response to the evolving AI landscape.
Leave a Reply