Following the crowd -especially for panic sales, it rarely works.
NASDAQ COMPOSITE has been increasing the market over the past few years, and the development of the artificial intelligence (AI) has been running for two seconds, while the economic situation improves the largest catalyst. AI has existed for decades, but recent progress can be a game changer by rationalizing common tasks and improving productivity.
One of the largest beneficiaries of this trend is NVIDIA (NVDA -16.97 %)Graphic Processing Unit (GPU), which became a gold standard to execute the AI system, has been pioneered. However, a report has recently emerged that Chinese emerging companies have cracked code for developing powerful AI systems, using inferior chips and new training processes. If so, this could spell out bad news for NVIDIA (at the time of this writing) in the past two years, and is promoted by robust sales and more impressive benefits.
The news is certainly concerned, but it predicts that the sinking of the NVIDIA will rise to a new height. Here are three reasons.
Image source: Getty image.
1. Detailed devil
The world’s largest high -tech companies are to buy the NVIDIA GPU as fast as possible, and some reports suggest that the supply will be sold out next year. These AI -centered chips provide the calculated horsepower required to execute these state -of -the -art algorithms.
However, China’s emerging companies, DeepSeek, argue that a low -performance processor can achieve the same results at one -half cost. The company claims that it has developed the latest system for only $ 100 million to $ 100 billion from $ 100 million. These claims rushed to NVIDIA and many other AI -centered technical stocks. A popular story is that if AI models can be created using low quality and low cost chips, the sale of NVIDIA will fall off the cliff.
It is important to keep in mind that DeepSeek’s claim may not be able to withstand scrutiny. In a memo to clients this weekend, Bernstein’s analyst, Stacey Rasgon, wrote, “Deepseek really built Openai for $ 5 million?” Of course it is different. “Analysts have noticed that many of the unique development costs and additional resources are not included in the price, even though they are rarely found in the price. Rasgon suggests that the cost of developing DeepSeek R1 is probably still smaller than the existing system.
2. Comparison of apple and orange
Many AI buildouts in data centers, which make up most of NVIDIA’s chip sales, were needed to meet AI acceleration demand. Most of these use cases are related to business.
For example, Microsoft has quickly incorporated AI functions in a wide range of existing software (SaaS), introducing Copilot, a sweet -improved tool. Palantir Technologies has developed an artificial intelligence platform (AIP). This is a standard leader to use the data of the company itself to solve actual business problems. Many of the developed applications are aimed at improving the productivity of enterprise users.
However, as Wedbush analyst Dan IVES pointed out, “Starting a major language model (LLM) with consumer use case (LLM) is one thing … wider AI infrastructure. Starting is a completely different ball game, “In other words, chatbots like Chatgpt and DeepSeek can be intrigued by consumers, but corporate applications are even more. Because of the fact, the opportunity will be much less, and “NO US GLOBAL 2000 will release the AI infrastructure and use case using the NO US Global 2000.” 。
Therefore, these developments in AI are certainly worth watching carefully, but are unlikely to have a short -term impact on AI acceleration adoption in the US corporate market.
3. NVIDIA is not one trick pony
It is easy to forget that most of the NVIDIA’s revenue was from a graphic card used by gamers. In fact, in early 2022, NVIDIA produced more sales from game chips from the data center. The appearance of the generated AI has changed everything, but it helps to explain important points about NVIDIA.
CEO’s Jensen Huang has proved to be very skilled in positioning the company for the next big technical breakthrough, as clear from the success of AI. Most of the current sales of NVIDIA are from the AI equipment data center, but Huang is already looking at the future.
The company provides hardware and software to car manufacturers working on automatic cars, and have a deep knowledge in the area of automobiles. NVIDIA also has a huge application library for companies to support Copilot and Agent AI. We also invest a large investment to promote communication, robot engineering and drones.
NVIDIA has a lot of fingers on many pies, and I don’t know what will happen to the company’s “next big”. That said, given the history of NVIDIA’s innovation, it’s probably a matter of time.
Bonus Round: All opportunities are discounted
Finally, after today’s shellac, NVIDIA shares sold only 27 times next year’s expected revenue. As a result, long -term investors give the opportunity to buy shares in companies with long runways for innovation achievements and growth -all at a discounted price.
Danny Vena has been working in Microsoft, NVIDIA, and Palantir Technologies. Motley fools have been in the job of Microsoft, NVIDIA, and Palantir Technologies. Motley Fool recommends the following options: A $ 395 phone call at Microsoft in January 2026 and a $ 405 call to the short -term Microsoft in January 2026. Motley fools have a disclosure policy.
