Nvidia is under significant pressure as its shares have sharply declined following the rise of Chinese AI startup DeepSeek. DeepSeek's introduction of AI models that rival Western chatbots in performance, but at a fraction of the cost, has posed a direct challenge to Nvidia's dominance in the AI hardware market. The R1 model, in particular, is reported to be 27 times cheaper than comparable offerings from established players like OpenAI, potentially disrupting Nvidia's high-margin business model. DeepSeek's technological advancements, such as their mixed-precision training framework, have allowed them to achieve massive memory savings without sacrificing performance, reducing the number of GPUs required for training and directly impacting Nvidia's core business.
The Direxion Daily NVDA Bear 1X Shares (NVDD) saw a significant increase, rising 10.76% to $6.69 at 9:00 AM on Monday, January 27.