You may think that it is artificial intelligence (AI) Chip King NVIDIA (NVDA -2.84 %) Given that the news of DeepSeek’s achievements in the AI space erased the market capitalization of about $ 600 billion on January 27, you may not be so satisfied with DeepSeek in China.
However, NVIDIA, along with analysts and investors, grasps more constructive views, and should be praised for DeepSeek’s ability, which designs AI chatbots comparable to Openai’s Chatgpt, should be praised. He claims that it may be an opportunity. With that in mind, should investors buy NVIDIA dip?
Praise for progress
When DeepSeek increased to the public’s consciousness, the market first responded by selling NVIDIA, as emerging companies in China had created chatbots at the same amount of ChatGpt.
Chinese companies say that they spent only $ 5.6 million to train large -scale language models and used a very powerful graphic processing unit (GPU) based on US exports. The United States prohibits companies like NVIDIA to sell some of the most advanced chips to China, just for concern about how they use their abilities.
Some of the recent NVIDIA investment papers are that they have a huge amount of competitive floods thanks to the latest GPU and the CUDA platform.
The total profit margin from 74 % to 79 % last year is high -this premise indicates that the AI chip market and its own price setting power are almost completely controlled. However, if a company with less than 200 employees spends less than $ 10 million and duplicates the latest technology of AI software using the old NVIDIA chips, this can be all threatened.
I suspect that the cost of DeepSeek’s chatbot is only $ 56 million, and I’m wondering what input it has actually entered its design. That’s why it was interesting to see NVIDIA’s commentary on DeepSeek. NVIDIA’s spokeswoman praised the “excellent AI progress”, which indicates how to create a new model.
The company also stated that DeepSeek also indicated that NVIDIA chips are useful in China, a company’s material earning driver, and that the market requires more chips to meet demand.
Analysts have argued that the rise in DeepSeek could mean the end of NVIDIA. In most cases, it is considered a wider AI trendy opportunity. Daniel Newman of Futurum Group, the chief strategist of Global Tech Researcher, called overreacting. Their models can create solutions with less overhead costs (profit per share). ”
Companies such as metapratforms promise to spend hundreds of millions on AI infrastructure, but if it is found that some of this expenditure is not necessary, doors may be opened to competitors. If it is found, they may probably benefit.
Do I need to press the purchase button?
Do you think NVIDIA is over? Absolutely not. Companies, such as NVIDIA, tend to find a way to survive, but also go ahead of competitors.
If Deepseek makes AI software wider, it can drive more use and increase the demand for NVIDIA chips. Following the big cell -off on January 27 and the gentle rebound on January 28, the company’s pre -prices and acquisition rates (P/E) were slightly higher than the five -year average.
NVDA PE ratio (forward); data by YCharts.
My problem with NVIDIA and its “Magnification SEVEN” cohort is that they are still trading at a high multiple of the two years of bullish market. I don’t know much about AI and how wide it is.
Rather, the arrival of DeepSeek indicates how fast we are in AI games. A similar event occurred in the dot com bubble. After that, there was a sudden pullback between the Internet stock, too fast, but eventually the Internet changed everything.
If you plan to retain stock for 10 to 20 years, you can buy NVIDIA now. However, I think it could be a bumpy vehicle in the short term.
Randi Zuckerberg, a former director of market development, Facebook spokeswoman, and sister of Mark Zuckerberg, the CEO of Meta Platform, is a member of the Motley Fool’s Board of Directors. BRAM BERKOWITZ has no position in any of the stocks mentioned. Motley Fool recommends meta platform and NVIDIA. Motley fools have a disclosure policy.
