DeepSeek Shocked the AI Market Last Week. Here's Why Nvidia's Latest Move Should Crush the Panic.

Last week, the AI market was shaken by the emergence of DeepSeek, a Chinese startup that claimed to have developed a highly capable AI model for a fraction of the cost of its American rivals. The news sent shockwaves through the tech industry, with major AI stocks plummeting and Nvidia, the leading AI chipmaker, suffering a significant loss in market value. However, Nvidia's latest move could help crush the panic and reassure investors.

DeepSeek's R1 model, developed using less powerful Nvidia H800 chips due to US export restrictions, outperforms models from leading US tech giants like OpenAI and Google. The company claims to have spent around $5.6 million to develop the model, significantly lower than the billions of dollars invested in existing US models. This has raised questions about the necessity of large investments in AI infrastructure by US companies and the financial efficiency of their AI spending sprees.



However, Nvidia's latest move should help alleviate some of the concerns. The company announced that it has added DeepSeek's model to its offerings on Azure, Microsoft's cloud computing platform. This move demonstrates Nvidia's commitment to supporting innovation in the AI space, regardless of its origin. By making DeepSeek's model available on Azure, Nvidia is sending a clear signal that it is open to collaboration and competition in the AI market.

Moreover, Nvidia's decision to support DeepSeek's model could help address some of the geopolitical concerns surrounding AI development. By facilitating access to DeepSeek's model, Nvidia is promoting open-source development and democratizing AI technology. This could help foster a more competitive and collaborative AI ecosystem, benefiting both US and Chinese companies.

In conclusion, DeepSeek's emergence has challenged the prevailing narrative of US dominance in AI and raised questions about the financial efficiency of AI spending by major tech companies. However, Nvidia's latest move to support DeepSeek's model on Azure should help crush the panic and reassure investors. By promoting open-source development and collaboration, Nvidia is demonstrating its commitment to fostering a more competitive and collaborative AI ecosystem. As the AI market continues to evolve, investors should keep a close eye on the developments surrounding DeepSeek and Nvidia's latest move.