A decline in investor fears over DeepSeek’s low-cost AI subs drowned out Nvidia (NVDA, Financial) shares on Tuesday, which rebounded 9 percent after plummeting 16 percent on Monday. Such concerns about the Chinese AI startup’s efficiency breakthrough triggering a sell-off that erased nearly $600 billion in Nvidia’s market value were at the heart of the sell-off.
However, former Intel (INTC, Financial) CEO Pat Gelsinger dismissed the market panic as being overblown. DeepSeek’s success isn’t a threat, Gelsinger wrote on LinkedIn, saying the market is getting it wrong: AI’s growth potential is being proven. He compared the situation to the explosion of PC and mobile phone adoption, where widespread adoption came largely from affordability, which helped industry leaders.
DeepSeek’s AI model runs at a minuscule fraction of OpenAI’s costs, leading people to wonder if we’re headed into a price war with AI. But Gelsinger says cost reductions can feed innovation, not doom premium solutions to failure. ‘Technological constraints were pointed to in historical trends in which technological constraints led to breakthroughs,’ he said.
But Nvidia’s rapid comeback underscores broader market unease about how it’s evolving into AI and investors’ reassessment in the long term. As AI adoption hastens, the industry continues to be a front burner for both the establishment giants and the challengers.
This article first appeared on GuruFocus.
