On Nvidia

Nvidia’s stock price took a beating this week, falling 17% on Monday and losing $600 billion in market capitalization. Nvidia’s plunge occurred after Chinese company DeepSeek released a free, open-source large language model (LLM) that reportedly cost less than $6 million to build and required less intensive use of the GPUs (graphic processing units) that Nvidia builds.

However, as Noah Smith notes, it’s unclear what future demand for Nvidia chips will look like. DeepSeek’s breakthrough may well mean that LLMs will be less resource-intensive than previously thought. But cheaper LLMs also means more people and firms will use them, which would increase demand for Nvidia chips. It’s also worth mentioning that despite Nvidia’s losses, the stock merely fell to its former price point in October, 2024:

Source: Google Finance

James Surowiecki argues that the future of AI has become more cloudy—it is possible that the massive investment by tech companies will creates LLMs far superior to those available via smaller companies or open source. But if cheap AI models are good enough for most consumers, then this bet by the tech behemoths may not pay off.

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