Nvidia In Trouble Because Of Deepseek

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Nvidia In Trouble Because Of Deepseek

Is Nvidia In Trouble Because Of Deepseek?

DeepSeek took the AI sector by surprise with claims that they created an LLM for just $5.6 million. While other companies like OpenAI spend billions, DeepSeek has done it in just mere millions.

As a result of this, all the big companies in the tech sector took a major hit. One of them was Nvidia as there is a growing perception that AI tech can be built with less chips.

Nvidia (Nvda) To Bounce Back

Right now, Nvidia remains a key chip supplier and is the preferred supplier around the world. However, now everyone is saying that if DeepSeek can do it, so can others! However, its worth noting that we still can't verify the claims of the DeepSeek.

Going forward, the notion put forward by DeepSeek is a really dangerous one, at least for Nvidia. But, the big question is still about the legitimacy of the DeepSeek claims.

There is also a growing consensus that DeepSeek built its model using the data from the OpenAI. If this turns out to be true, the DeepSeek claim will be nullified.

Looking ahead, the spending on AI infrastructure will only increase. This means the Nvidia stock will also recover and even move towards new highs.

Right now, the forward P/E ratio of Nvidia is 27, according to the analysts. The forward PEG of the Nvidia is still below 0.85 which makes it a bargain.

In general, stocks which have a PEG ratio under 1 are classified as undervalued. This fact alone makes Nvidia a very interesting choice for investors.

Overall, Nvidia stock remains a strong buy, and the recent decline should be taken as an opportunity to buy the dip. As for the DeepSeek issue, the Chinese based AI model will probably be forgotten unless another AI is developed in less budget (millions not billions).

That's why it's safe to say that the recent decline in Nvidia will be short-lived. However, the company could face trouble if Trump administration puts new restrictions on the chips export.

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