DeepSeek Disrupts AI Market, Challenging Nvidia's Dominance
Nvidia's stock price continues to decline as the AI landscape shifts, raising questions about the hefty costs associated with cutting-edge AI models.
DeepSeek's recent announcement of training a world-class model for just $6 million has shattered the belief that only a select few companies can afford such endeavors. This has led to a re-examination of the AI investment trajectory.
Snowflake CEO Sridhar Ramaswamy believes DeepSeek's innovation has opened up the AI market to more competitors. "It raises the question of whether spending billions of dollars is necessary to train cutting-edge models," he said.
Wall Street analysts agree that DeepSeek has injected uncertainty into the AI trade. Evercore strategist Julian Emanuel notes that the lower cost to run AI models benefits the software industry as a whole.
Bank of America analysts see potential implications for both Microsoft (MSFT) and Oracle (ORCL). While MSFT could benefit, ORCL's cloud business may face challenges.
Nvidia's stock performance has suffered in the wake of these developments, with a 13% decline over the past week.
Ramaswamy predicts a surge in efforts from other model training companies, including Snowflake, to match or surpass DeepSeek's cost efficiency. "That's how innovation works," he said.