Competition from low-cost AI startups like DeepSeek may impact Nvidia and OpenAI

From Nasdaq: 2025-01-31 06:27:00

DeepSeek, an AI research lab based in China, spun out of the successful hedge fund High-Flyer in 2023. Their cost-effective large language models caused panic in the U.S. stock market, impacting chip suppliers like Nvidia and developers like OpenAI.

DeepSeek’s V3 model, created for $5.6 million, competes with OpenAI’s models, raising concerns for both companies. OpenAI’s closed-source models may face challenges as the AI industry trends towards commoditization, while Nvidia could benefit from lower inference costs offsetting reduced GPU demand.

With DeepSeek and another Chinese AI start-up offering cheaper rates for AI models, the market may see increased competition and innovation. OpenAI’s closed-source approach could pose challenges as developers seek more open-source models for flexibility and data privacy. Nvidia may benefit from lower costs driving increased demand for GPUs in the long term.

As AI models become more affordable and accessible, companies like Nvidia and OpenAI face uncertainty in a changing market. Lower costs could drive increased usage and demand for computational power, potentially benefiting Nvidia in the long run despite short-term challenges. Stay updated during the new quarterly earnings season for insights on market dynamics and company performance.



Read more at Nasdaq: DeepSeek Isn’t the Only Low-Cost AI Startup. Here’s What It Means for OpenAI and Nvidia.