Founded in 1993, The Motley Fool is a monetary company committed to making other smarter, happier and rich people. The Motley Fool reaches millions of people every month and every month through our premium investment solutions, loose recommendation and markets at Fool. com. Analysis, non -public monetary education, better qualified podcasts and the Motley Fool Foundation.
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, personal finance education, top-rated podcasts, and non-profit The Motley Fool Foundation.
The technology giants around the global were shaken on January 27 after the new Deepseek Chinese company released an impressive style with a low position of synthetic intelligence (AI), aroused generalized considerations with respect to the ‘extension of the investment paid in the dear devices and knowledge centers.
DeepSeek released a free AI assistant last week that quickly saw its downloads overtake OpenAI’s ChatGPT on the Apple App Store in the U.S. The Chinese start-up claims the free, open-source large language model known as V3 took just two months to train and cost less than $6 million. What’s more, DeepSeek claims its latest cost-effective model, the R1, can match the performance of OpenAI’s o1 reasoning model on certain benchmarks.
The company also claims R1 is 20 to 50 times cheaper to use than o1. The advent of this cheaper model hammered the shares of tech giants that have been investing billions of dollars in AI infrastructure.
NVIDIA (NVDA -3. 67%), which is the main supplier of graphic processing sets (GPU) used for the education and inference of AI models, saw its inventory market falling 17% on January 27, the corporate, the corporate, One of the biggest beneficiaries of beneficiaries of beneficiaries of the beneficiaries of the beneficiaries of mass expenditure for AI infrastructure because it controls approximately 85% of the IA flea market.
NVIDIA TOP-END KNOWN MEDIUM GPUs would be worth between $30,000 and $40,000 consistent with the unit. Tech giants, such as Microsoft and meta plats, bought payloads of thousands of those nvidia chips to shape and deploy AI models. These two corporations would have spent $nine billion in 2023 to buy a general 300,000 Nvidia AI chips. This investment won last year because Microsoft would have planned to get its hands on 1. 8 million NVIDIA GPUs, while Meta expected to get 350,000 chips last year.
Deepseek, on the other hand, said it used 2,048 of the NVIDIA H800 H800 H800 (a degraded edition of the popular AI GPU H100 of the flea manufacturer) to shape its model. By comparison, Operai would have used more than 10,000 H100 flagship chips to shape its GPT-4 and GPT-4O models.
If Deepseek’s statements are true, then it means that competitive AI models can be trained at a fraction of what Microsoft’s, Meta and others have been spending, having in doubt the massive investment plans of the entire technology industry It is not surprising that the entire ecosystem of AI deepens in red after this development.
Broadcom (AVGO 2. 60%), which supplies personalized AI processors AI to Microsoft, Alphabet, Meta and OpenAi to expand internal fleas, also experienced its 17%stock. The manufacture of semiconductors of Foundry Giant Taiwan (TSM 0. 56%), popularly known as TSMC, fell more than 13%.
Broadcom and TSMC have also benefited from building demand for AI fleas, the course of their moves that has skyrocketed in more than two years. Broadcom dominates the custom market of the AI processor market with an estimated 55% to 60% of the percentage according to JPMorgan. The corporation supplies a large $60 to $90 billion upload marketplace value for its custom processors and network chips over the next 3 years. This indicates primary construction in its AI revenue source compared to just over $12 billion last year.
TSMC, on the other hand, is the must-have chip maker for uninferred flea brands like Nvidia and Broadcom. It is the dominant player in the global foundation market through a safe distance, and it has built a forged clientele that allows it to gain advantages from AI adoption in various industries. The foundry giant reported an impressive revenue expansion stream in 2024 and also expects forged functionality in 2025.
Wall Street analysts believe the DeepSeek-inspired fears about a slowdown in AI infrastructure spending are overblown. The compute capacity that will be freed up by the launch of more efficient AI models is likely to be absorbed elsewhere, according to Bernstein Research. Others share a similar view, believing that the use of AI should only expand, sustaining demand for chips from Nvidia, Broadcom, and TSMC.
At the same time, there are suspicions that DeepSeek may be downplaying how much it spent training its models. According to one source, it may actually have access to 50,000 of Nvidia’s powerful H100 GPUs. Given the uncertainty of the situation, investors would do well to avoid a knee-jerk reaction as seen with the recent sell-off.
After all, spending by major tech giants on AI infrastructure is still likely to head higher once again in 2025, as evidenced by the capital spending plans laid out by the likes of Microsoft and Meta, as well as the announcement of the Stargate project. Investors who remain bullish on AI can now buy many top AI stocks at a modest discount.
JPMorgan Chase is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Market data powered by Xignite and Polygon.io.