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After recovering partially from Monday’s 17% rout on Tuesday, NVIDIA’s (NASDAQ:NVDA) stock is back in the red again Wednesday as investors continue to assess the impact of DeepSeek’s AI model on the AI chip giant’s future prospects.
Shares of NVIDIA are down 4.5% heading into the noon hour on Wall Street after rallying back nearly 9% on Tuesday.
Overall, while many Wall Street analysts believe the DeepSeek news is hype and a possible head fake, others note that if the China-based DeepSeek could build an effective AI model for a fraction of the costs on outdated NVIDIA chips, maybe others could also.
As one market watcher said, "The efficiency genie is out of the bottle - there’s no going back to the "just throw more GPUs at it" approach."
"AI is about to become a lot more accessible, and a lot less expensive," the market watcher continued.
Big players like Amazon (NASDAQ:AMZN)’s AWS are already looking at the DeepSeek model. Lynx Equity Strategy analyst KC Rajkumar highlighted that the community board at AWS last night rolled out instructions for deploying DeepSeek-R1 on Amazon’s EC2. The blog post states that the R1 matches the capability of OpenAI’s o1 reasoning model, at less than 10% of the cost.
Rajkumar goes on to ask, given issues getting NVIDIA Blackwell rolled out, how long until Microsoft (NASDAQ:MSFT) follows and possibly pulls the plug on Blackwell.
"We think the arrival of DeepSeek as a disruptive force is roiling strategic and operational plans at MSFT. With DeepSeek’s ability to run on lower grade GPUs, can the Blackwell program at MSFT survive?