NVIDIA recently lost $600 billion in market value after a new Chinese company DeepSeek unveiled a groundbreaking AI system that doesn’t need NVIDIA’s expensive chips. This raised fears about declining demand for NVIDIA’s products, and DeepSeak showed it could create a competitive AI model quickly and at a much lower cost than NVIDIA and Gemini.
The announcement caused NVIDIA’s stock to plummet and affected other tech giants like Microsoft and Gemini. Leading to increased competition. In response, NVIDIA may need to accelerate innovation and lower its prices to maintain its market share. As the situation unfolds, it’s clear that companies will need to adapt quickly to this new competitive environment to survive. An NVIDIA spokesperson tells Tech Crunch.
“DeepSeek’s work illustrates how new models can be created using that technique. Inference requires significant numbers of NVIDIA GPU s and high-performance networking. We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling.”
This release comes after Biden signed an executive order further restricting American companies from sending advanced AI chips into countries like China where the company DeepSeek is based. Many leaders are worried that a Chinese company was able to build an AI system that matches the most powerful version of ChatGPT in a minimal amount of time for a fraction of the price.
In summary, DeepSeek’s new AI system shows an urgent need for tech companies to adapt quickly to new competitive pressures.
Related Stories:
https://techcrunch.com/2025/01/27/nvidia-drops-600bn-off-its-market-cap-amid-the-rise-of-deepseek/
https://www.theatlantic.com/technology/archive/2025/01/deepseek-china-ai/681481/
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