GIANT chipmaker Nvidia experienced an unprecedented single-day market capitalization loss of nearly $600 billion, with its stock price dropping 17 percent to close at $118.58 on Jan. 27, 2025.
This event, triggered by the emergence of Chinese AI laboratory DeepSeek’s new open-source large language model, sent ripples through the tech sector and raised questions about the future of AI hardware demand.
“Taken at face value, if the DeepSeek model has lowered the barrier to entry to AI, then that should mean more not less demand for Nvidia chips as more companies race to develop AI models and capabilities,” said Will Rhind, founder and chief executive at GraniteShares, a provider of exchange-traded products, giving a contrarian perspective on the market reaction.
Rhind’s statement suggests that the market may be overlooking a potential positive outcome for Nvidia. As AI technology becomes more accessible, it could drive increased adoption across various industries, potentially boosting demand for high-performance hardware like Nvidia’s chips.
“While AI algorithms may become more commoditized, we believe two key factors continue to support Nvidia’s strong position in the market,” said Manuj Sarpal, chief technology officer at GraniteShares, adding further context to the situation. “The need for robust hardware to run increasingly complex AI models remains critical, and Nvidia’s role as a leading provider of high-performance GPUs cannot be ignored, and as AI models continue to grow in complexity and power, Nvidia’s established ecosystem of hardware, software and developer tools gives it a significant advantage in supporting and accelerating AI innovation.”
GraniteShares noted that while DeepSeek’s emergence has disrupted the market, it also highlights critical concerns about data privacy and security, particularly given DeepSeek’s Chinese origin and the associated political and regulatory implications.
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