DeepSeek, the Chinese chatbot, made its debut on Monday, the 27th of January, 2025 sending a shockwave throughout the Silicon Valley. Nvidia lost almost half a trillion dollars in value on that fateful Monday. Nvidia has since then recovered, and its revival has been achieved by the appearance xAI’s Grok-3. Grok-3 has a huge stockpile of 1 lac GPUs, which could expand to a million chips. xAI is progressing at superhuman pace. This proves that the route to success in cutting-edge AI runs through Nvidia and this will not change in near future. DeepSeek stimulated US efforts to build more efficient smaller models, but it is not a threat to the spending on Nvidia chips.
There are competitive pressures, e.g. Amazon.com chips made inhouse such as Trainium and Inferentia, which are more economical for training and running AI models. However, Nvidia is not just selling chips but an AI platform – CUDA which is popular among AI developers and is compatible only with Nvidia chips.
Investors may overreact in future too about any depressing signal. There are snags in Nvidia’s Blackwell chips. There are export curbs on Nvidia as far as China is concerned. However, these may not throw Nvidia massively off course. There are issues of AI being overhyped but that will be known in future. Till then Nvidia chips will be bought.
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