Ouch, NVIDIA’s share price hasn’t been doing too well over the last few days. In fact, the company’s share price (which used to claim the title of most valued company on the stock market) has just taken a serious nosedive. The company has lost 17% of its value, or some $589 billion! The reason? A Chinese generative AI: DeepSeek, a model described as powerful, inexpensive, but above all developed with limited resources!
NVIDIA loses $589 billion!
As you know, China is currently under sanctions from the United States. The latter are restricting China’s access to cutting-edge graphics cards in order to prevent them (or rather slow them down) from developing their own AI model using American technologies. Artificial intelligence has recently become a strategic issue.
In short, until now, and listening to investors, developing your own AI has been very expensive, especially in terms of hardware. Cutting-edge cards are needed, and that’s where NVIDIA comes in, establishing itself as a key player in the sector. In just a few years, the brand has achieved a virtual monopoly in this sector , selling insane quantities of hardware at ever-higher prices.
But when a Chinese start-up manages to come up with a high-performance generative AI model ‘à la’ ChatGPT with very little money, it’s bound to reshuffle the deck. According to OpenAI boss Sam Altman, DeepSeek is “impressive” and packed with features, especially when you consider that it cost $5.6 million to develop, ouch..
Once the effect of Trump’s inauguration had passed, the markets woke up to the fact that the application was the most downloaded from the Apple store in the United States. NVIDIA lost 17% of its value, or $589 billion… But it also dragged other companies down with it:
- AMD lost 6.37
- Micron lost 11.71
- Marvell Technology was down 19.10
- Broadcom lost 17.40%
Nevertheless, this is also the cost of innovation, since it is always more expensive to introduce new technologies than to be the “next”. What’s more, with China under US sanctions, the country has to be more efficient and ‘do more with less’, as it officially has no access to cutting-edge GPUs… Although some, including Elon Musk and the boss of ScaleAI, suspect that the company may have had access to H100-type hardware, under the table of course. We all remember the Super Micro affair… Or online service providers.
Now all that remains is to sort out the real from the fake. Such a feat has serious economic consequences, and let’s not forget that the United States and China are in the midst of a rivalry to become or maintain their status as the world’s leading power. It would not be surprising if certain facts were embellished to serve one narrative or another.
