Due to the high popularity of Chinese AI DeepSeek, Nvidia has lost about $600bn of its value
Chinese artificial intelligence startup DeepSeek became a sensation when it released its R1 model last week. This model demonstrates high functionality and accuracy despite using fewer resources and processing power compared to its US counterparts such as OpenAI's ChatGPT and Google's Gemini.
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The achievement was a blow to Nvidia, the semiconductor giant. Nvidia's shares fell 16.9% from Friday to Monday, resulting in a loss of nearly $600bn in market capitalisation. The stock closed at $142.62 per share on Friday and closed at $118.58 on Monday. The reason for this drop could be because the R1 model shows that you don't necessarily need expensive, high-end chips or hardware to create impressive AI models, which is bad news for Nvidia.
A Nvidia spokesperson noted that DeepSeek's work illustrates how new models can be created using other widely available models and computing resources that are fully export-control compliant.
The development comes a week after former President Joe Biden signed an executive order imposing further restrictions on the export of advanced AI chips made in the US to certain countries, including China, where DeepSeek is based.
However, the current president, Donald Trump, has already rescinded this executive order and signed another to create Project Stargate, which aims to make the US a leading country in artificial intelligence by investing $500 billion to develop AI-enabled data centres.
Source: techcrunch
