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Let’s just call DeepSeek the plot twist the AI world didn’t see coming. It also has market darlings like Nvidia (NVDA) asking investors, “what about me?”
After plummeting in price Nvidia's stock remains on the slide while the future of AI looks as though it will cost a lot less.
“Conventional wisdom all of last year was that training amazing models was going to be possible for only a handful of companies,” Snowflake CEO Sridhar Ramaswamy told chof360 Finance executive editor Brian Sozzi during an episode of Opening Bid (see video above or listen below). “What DeepSeek has done over the past few weeks is shatter that belief by saying they can train a model for $6 million.”
Ramaswamy is a Big Tech veteran with over a decade spent at Google (GOOG) before co-founding Neeva, a search engine that treated user data as sacrosanct. Neeva was acquired by Snowflake in 2023, a move that ushered him to the position of CEO earlier this year. As someone committed to positive technology, Ramaswamy’s eyes are on AI and its implications.
“The fact that [DeepSeek was] able to train a world-class model for a relatively small amount of money and do something that only three companies (OpenAI, Anthropic, and Google) have been able to do is a big change forward,” he said.
Watch: how billionaire Salesforce CEO Marc Benioff is thinking about AI
According to Ramaswamy, DeepSeek’s disruption is a twofold signal. “One, it says there’s still a lot of innovation left and many companies can aspire to train these models,” he said. It also “raises the really interesting question of: do you need to spend billions of dollars in order to train cutting-edge world-class models?”
Ramaswamy thinks the market sell-off on Monday — and with Nvidia in particular — was the right call by investors given the change in the AI narrative.
Wall Street agrees the AI trade has suddenly become more uncertain.
“DeepSeek’s ultra-low cost AI model overshadowed the immigration and tariff high drama, kicking off another breathless week. AI-exposed semi, hardware and power stocks were sent reeling as doubt was cast on the investment trajectory and values of these names,” said Evercore strategist Julian Emanuel in a client note.
Meanwhile, analysts at Bank of America shared their enthusiasm for the possibility DeepSeek represents in the space.
Noting that it could bode well for Microsoft (MSFT) and have negative impacts on Oracle's (ORCL) cloud business, Carly Liu and Brad Sills wrote, “The exact cost of development and energy consumption of DeepSeek are not fully documented. We believe that the implications of lower cost to run AI models is a benefit to the general software group.”
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