Nvidia's DeepSeek R2 Release May Present a Short Opportunity
Saturday, May 3, 2025 12:26 pm ET
1min read Nvidia may be a short opportunity due to the upcoming release of DeepSeek R2, which could negatively impact the company's performance. The scenario presents an attractive risk-reward scenario and may materialize in May.
Ask Aime: "Is Nvidia a short opportunity as the DeepSeek R2 release looms?"
Nvidia Corporation (NVDA) may present a short-term investment opportunity for investors, given the upcoming release of DeepSeek R2 by Chinese startup DeepMind. The scenario presents an attractive risk-reward profile and could materialize in the coming months.DeepSeek R2, an advanced AI model, is expected to be released in May 2025. This development could negatively impact Nvidia's performance by potentially reducing demand for its AI chips, which are the backbone for developing AI. DeepSeek R2's release could lead to increased competition in the AI market, potentially reducing the demand for Nvidia's GPUs.
However, Nvidia has been proactive in addressing these challenges. The company is reportedly modifying its AI chips to comply with export restrictions, allowing sales to Chinese companies. This move has been met with positive market sentiment, with Nvidia's stock surging by 2.5% following the announcement [2]. This indicates that investors are optimistic about Nvidia's ability to capture market share in China while navigating regulatory challenges.
Moreover, Nvidia has warned that it could lose up to $5.5 billion in revenue in FY26 due to the new licensing terms coming from the loss of business from China [1]. This highlights the potential short-term impact of the DeepSeek R2 release on Nvidia's performance.
In conclusion, the upcoming release of DeepSeek R2 presents a potential short-term opportunity for investors in Nvidia. While the release could negatively impact the company's performance, Nvidia's proactive measures and the positive market sentiment indicate that the company is well-positioned to navigate this challenge.
References:
[1] https://www.indiatoday.in/amp/technology/news/story/anthropic-says-nvidia-gpus-getting-smuggled-into-china-in-prosthetics-nvidia-calls-it-utter-rubbish-2718564-2025-05-02
[2] https://blockchain.news/flashnews/nvidia-adjusts-ai-chips-for-chinese-market-nvda-jumps-2-5-on-positive-news
