Nvidia Stock Dives as Chinese AI Model Raises Investment Concerns
Key Points:
* Nvidia (NVDA) shares plunged over 12% in early trading on Monday.
* Sell-off extended to other chip stocks and broader market.
* Concerns emerged after China's DeepSeek launched a new AI model perceived as a threat to OpenAI.
* DeepSeek's model reportedly trained for just $5.6 million, significantly lower than OpenAI's costs.
* Investors fear that AI models may require fewer chips and energy in the future, impacting Nvidia's dominance.
* Chip stocks broadly declined, including Broadcom (AVGO), Micron (MU), and Advanced Micro Devices (AMD).
* Analyst suggests DeepSeek's model may drive urgency among U.S. companies to leverage GPUs for competitive advantage.
* Tightened US export restrictions could hinder DeepSeek's model development.
* The US is investing heavily in AI infrastructure through projects like Stargate AI.