NVIDIA’s CEO, Jensen Huang, has addressed the backlash surrounding DeepSeek for the first time, contending that investors have misjudged the situation and that their perceptions of the market dynamics are flawed.
Jensen Huang Applauds DeepSeek’s AI Innovation, Stresses Misinterpretation by Investors
DeepSeek’s release of its R1 AI models has been heralded as a significant advancement in the AI landscape; nonetheless, it coincided with a challenging period for NVIDIA. The company experienced a staggering decline in market capitalization, amounting to $600 billion, resulting in Huang losing over 20% of his personal wealth. This sharp decline indicates a clear dissatisfaction among investors regarding DeepSeek’s accomplishments. In a recent conversation with DDN, Huang articulated his enthusiasm for DeepSeek’s success, while also emphasizing prevailing misconceptions within the investment community about the AI market.
From an investor perspective, there was a mental model that the world was pre-training and then inference. And inference was: you ask an AI a question, and you instantly got an answer. I don’t know whose fault it is, but obviously that paradigm is wrong.
It is so incredibly exciting. The energy around the world as a result of R1 becoming open-sourced, incredible.
– NVIDIA’s CEO via Business Insider
The stock market sell-off was largely triggered by reports that DeepSeek’s R1 was developed with a notably low training cost of approximately $5 million. This led to growing concerns about whether the demand for AI computing resources is merely a facade. However, these claims of “low-training” expenses were misleading, as it was later revealed that DeepSeek utilizes over $1 billion in AI hardware, underscoring the firm’s substantial need for significant computational power.
One noteworthy aspect of DeepSeek’s approach is its commitment to open-source AI models. This strategy not only encourages developers to contribute to further enhancements but also empowers organizations and individual users to customize the AI according to their specific needs. Such flexibility enables better utilization of localized computing environments and optimizes hardware resources effectively. Before DeepSeek’s emergence, open-sourcing AI models was often viewed skeptically, mainly due to the hype driven by companies like OpenAI.
NVIDIA’s upcoming earnings call on February 26 is generating significant anticipation. It is expected to shed light on the extent of the financial ramifications following the fallout from DeepSeek’s developments and the challenges posed by recent issues with their Blackwell AI products. Yet, it is evident that NVIDIA, facing competitive pressures from DeepSeek, remains a central player in the ongoing demand for AI computing power.
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