NVIDIA shares 5% tranche as China’s Deepseek asks for AI-related CAPEX by Investing.com

Investing.com- NVIDIA Corporation (NASDAQ:) Shares fell more than 5% in 24-hour markets, Robinhood data showed Sunday evening, amid growing questions about the need for major capital spending on artificial intelligence following the release of Deepseek in China.

NVIDIA data showed 5.2% to $135.20 indicated.

The isolation of AI has been shaken up with the release of Deepseek R1 – a large linguistic model that claims competing offerings from ChatGpt and Meta (NASDAQ:) while using a fraction of their budgets.

Deepseek, which is funded by Chinese funds High, has been acquiring around 50,000 of NVIDIA’s H100 AI GPUs, which are last-generation advanced AI chips.

The release of Deepseek has raised concerns that technology companies could adopt leaner, more capital-efficient approaches to AI development, entailing lower amounts of capital spending on data centers and advanced AI chips.

Although big tech companies could learn from Deepseek to design cheaper AI systems, “it may not be a happy development for NVIDIA,” Yardeni Research analysts said.

JPMorgan analysts argued that concerns about higher AI budgets were “overblown,” adding that Deepseek’s efficiency came about more than necessary, especially in light of China’s chip industry’s strict export controls.

Six of Wall Street’s Big 7 companies—which make up the bulk of NVIDIA’s largest clients—are set to report quarterly earnings this week, and are widely expected to report a CAPEX increase in AI development.

AI giant Openai last week announced a $500 billion joint investment in AI infrastructure.