2 Artificial Intelligence (AI) Stocks to Watch in the Wake of DeepSeek's Breakthrough
A relatively small Chinese artificial intelligence (AI) start-up created a large language model (LLM) generative-AI chatbot to rival OpenAI's ChatGPT. But this isn't the major story. The major story is the bomb the company dropped in January: that it reportedly trained its model using just $6 million and a couple thousand Nvidia (NASDAQ: NVDA) graphics processing units (GPUs). Meanwhile, U.S. tech companies spend billions and order hundreds of thousands of GPUs for similar work. For example, the Colossus supercomputer, a product of Elon Musk's company xAI, is said to contain 100,000 GPUs, with plans to increase that number to 1 million. The DeepSeek news hit Wall Street hard. What if the tech giants no longer have to spend billions on servers and GPUs?Despite initial concerns, the answer is probably a resounding no. Both Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) reaffirmed gigantic capital expenditure (capex) budgets in their latest earnings calls. Much of this spending will go toward data center infrastructure like Nvidia GPUs. Similarly, xAI is reportedly close to a deal with Dell (NYSE: DELL) worth $5 billion for data center infrastructure like servers and racks. This means xAI is moving ahead with Colossus, which means a huge investment in Nvidia products.As shown below, Nvidia's fiscal 2025 is already a smashing success, even with only three quarters reported, and this will likely continue.Continue reading
A relatively small Chinese artificial intelligence (AI) start-up created a large language model (LLM) generative-AI chatbot to rival OpenAI's ChatGPT. But this isn't the major story. The major story is the bomb the company dropped in January: that it reportedly trained its model using just $6 million and a couple thousand Nvidia (NASDAQ: NVDA) graphics processing units (GPUs). Meanwhile, U.S. tech companies spend billions and order hundreds of thousands of GPUs for similar work. For example, the Colossus supercomputer, a product of Elon Musk's company xAI, is said to contain 100,000 GPUs, with plans to increase that number to 1 million. The DeepSeek news hit Wall Street hard. What if the tech giants no longer have to spend billions on servers and GPUs?
Despite initial concerns, the answer is probably a resounding no. Both Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) reaffirmed gigantic capital expenditure (capex) budgets in their latest earnings calls. Much of this spending will go toward data center infrastructure like Nvidia GPUs. Similarly, xAI is reportedly close to a deal with Dell (NYSE: DELL) worth $5 billion for data center infrastructure like servers and racks. This means xAI is moving ahead with Colossus, which means a huge investment in Nvidia products.
As shown below, Nvidia's fiscal 2025 is already a smashing success, even with only three quarters reported, and this will likely continue.
