Nvidia CEO Jensen Huang downplayed concerns over the impact of DeepSeek’s AI model on the company’s dominance in the AI chip market.
Speaking during Nvidia’s latest earnings call on Wednesday, Huang dismissed speculation that DeepSeek’s R1 model, which requires fewer chips for training, would significantly affect Nvidia’s sales.
Instead, he emphasized that reasoning models like R1 demand greater computing power in the long term, positioning Nvidia for continued growth.
“Reasoning models can consume 100 times more compute, and future reasoning models will consume much more,” Huang stated.
“DeepSeek R1 has sparked global interest. It’s an impressive innovation, but more importantly, it has open-sourced a world-class reasoning AI model. Nearly every AI developer is applying R1.”
Nvidia’s latest financial results support Huang’s confidence. The company reported a record-breaking quarter with revenue of $39.3 billion, surpassing both internal forecasts and Wall Street expectations.
Jensen anticipates further growth, projecting revenue of approximately $43 billion for the next quarter. Its data center business, a key driver of AI chip sales, nearly doubled in 2024 to $115 billion, reflecting a 16% increase from the previous quarter.
Market Reaction and Stock Recovery
DeepSeek’s emergence initially triggered volatility in Nvidia’s stock, leading to a historic single-day selloff that erased nearly $600 billion in market capitalization.
The decline was fueled by speculation that DeepSeek’s AI model, which reportedly required fewer Nvidia chips, could reduce demand for the company’s hardware.
However, major technology firms, including Meta, Amazon, Google, and Microsoft, remained committed to AI investments, collectively allocating up to $320 billion for AI infrastructure and data center expansion.
This reinforced confidence in Nvidia’s long-term prospects, contributing to a market recovery.
Strong Demand for Blackwell Chips
Despite initial market concerns, Nvidia’s latest Blackwell chips are experiencing rapid adoption. The company reported selling $11 billion worth of Blackwell chips in a single quarter, marking the fastest product ramp in its history.
CFO Colette Kress highlighted that the demand underscores the market’s growing need for higher computing power.
Transitioning from the Hopper chip, which played a central role in the AI boom, to Blackwell presented some challenges, including server overheating issues. However, Huang assured investors that Nvidia is addressing these concerns and expects a smoother rollout for future updates.
Expanding Role of AI in Computing and Robotics
Huang noted that AI’s impact is still in its early stages, particularly in areas such as digital assistants capable of executing complex, multi-step tasks and AI integration with robotics.
He emphasized that these technologies are just beginning to scale, reinforcing the continued demand for advanced AI chips.
U.S.-China Trade Restrictions and Impact on Revenue
While Nvidia continues to see growth across most markets, U.S. export restrictions have significantly affected its revenue in China.
Since the Biden administration implemented stricter trade policies, Nvidia’s sales in the region have declined by 50%. Despite this, Huang remains optimistic about AI’s broader economic impact, suggesting that the industry’s expansion will offset challenges in specific markets.
Nvidia’s Position in a Competitive AI Market
The AI chip market remains highly competitive, with companies such as Meta, Google, and Amazon announcing substantial investments in AI infrastructure. These commitments, totaling hundreds of billions of dollars, highlight the ongoing demand for high-performance computing.
Despite concerns surrounding DeepSeek’s model, Nvidia remains a dominant player in the industry. With continued demand for AI computing power and substantial investments from major tech firms, Huang expressed confidence in the company’s trajectory, stating, “We will grow strongly in 2025.”
