NVIDIA shares bleed $384 billion in value in a few hours after China's DeepSeek shocks AI world

Chinese AI company DeepSeek is making some serious waves in the world of AI, with its R1 model being trained for 90-95% less money... making the industry re-consider all those AI GPU purchases... and seeing NVIDIA stock dropping 11% in pre-market trading, bleeding out $384 billion. Ouch.

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It's not just NVIDIA but other major tech stocks are down, with AMD also down by 5.3% in pre-market trading. Microsoft is also down by 6% and Meta is down by 4.6%... with hundreds of billions of dollars spent, and hundreds of billions of dollars more to spend on AI GPUs... these companies must be worried about the impact DeepSeek is going to have on the market.

DeepSeek has said its R1 model costs just $5.6 million to train, and when compared to other AI models like ChatGPT o1 from OpenAI which cost hundreds of millions of dollars to train... on hundreds of billions of dollars of the most advanced AI chips on the planet... which are mostly made by NVIDIA.

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If all of this is true, and DeepSeek can provide virtually similar AI assistance goodness that the headline-grabbing, drama-filled, somewhat shady operations of OpenAI and its ChatGPT assistant, well... China has a huge deal on its hands. This is just the beginning of the stock slide if that's true, because companies will begin asking if they REALLY need all of those mega-expensive AI servers, if DeepSeek can do it at 90-95% less cost.

DeepSeek's new R1 model has 671 billion parameters is rather large, with smaller "distilled" versions of R1 models ranging from 1.5 billion parameters to 70 billion parameters. DeepSeek's smallest R1 model can run on a laptop, but for the full-force R1 model it requires much more hardware... but, it's available through DeepSeek's API at prices that are a game-changing 90-95% cheaper than OpenAI's o1 model.