The launch of DeepSeek, an open-source artificial intelligence model developed in China, generated a wave of reactions in the media and financial markets at the start of 2025. Some sources claimed that this advancement would mark the end of NVIDIA’s dominance in the AI market, as it required far fewer chips to train.
However, weeks later, we can see that DeepSeek may not be a threat but rather a great opportunity for NVIDIA.
Why DeepSeek Caused NVIDIA’s Stock to Drop
When DeepSeek was introduced to the world in January 2025, its open-source model and lower development costs caught the industry’s attention. Many saw this as a game-changer since it meant that cutting-edge AI could be developed with fewer resources than previously thought. Its efficiency sparked several news articles about the future of AI accessibility and the role of open-source innovation in advancing machine learning.
This led to the speculation that the demand for specialized hardware would decline. And this had an immediate impact on public perception—NVIDIA’s stock fell nearly 17% on January 27, wiping out approximately $600 billion in market capitalization.
Despite the initial shock, the global demand for NVIDIA’s products has remained strong. For example, in February, the South Korean government announced plans to purchase 10,000 NVIDIA GPUs for a national artificial intelligence computing center. By the end of February, NVIDIA’s stock had rebounded.
Why DeepSeek Drives GPU Demand
What we’re finding out is that DeepSeek could actually increase the demand for NVIDIA chips rather than reduce it.
There are a three main reasons for this:
1. DeepSeek is open-source
Any company, advanced user or hobbyist can download and customize their own model, meaning more individuals can train AI without relying on proprietary solutions.
2. AI training still requires powerful GPUs
Although DeepSeek is highly efficient and used fewer chips than expected to train such an impressive model, it still relies on specialized hardware, and NVIDIA remains the leader in this market with its AI-focused GPUs.
NVIDIA can also provide cloud compute solutions that can even eliminate cost barriers, giving people on-demand access to powerful computational resources. Massed Compute is an NVIDIA service provider.
3. There is evidence of recent growing AI chip demand
Chinese companies such as Tencent, Alibaba, and ByteDance have increased their orders for NVIDIA’s chips. This shows that DeepSeek is already driving GPU purchases rather than reducing them.
Why Is this Happening?
A friend made this comparison about this phenomenon:
“When more efficient car engines that consumed less gasoline were developed, many people said this would ruin oil companies, but the opposite happened. Thanks to fuel-efficient engines, more people could afford to buy a car, and although each car used less gasoline, total gasoline demand increased!”
This is an interesting comparison that could explain what is happening with NVIDIA and DeepSeek. By making AI more accessible and efficient, more companies, developers and hobbyists will want to experiment with it. This will increase the demand for specialized GPUs and NVIDIA cloud compute technology for model training and deployment.
NVIDIA Is Likely Entering a New Growth Phase
Despite the initial market reaction, the reality is that DeepSeek could strengthen NVIDIA’s position and dominance. Open-source AI expands the market and allows more players to participate, which generates specialized hardware demand that was previously restricted to only a few.
NVIDIA’s business remains strong, and in the long run, the company is likely to benefit from the AI ecosystem’s growth thanks to open-source models like DeepSeek. What seemed like a threat could actually be one of the greatest opportunities for the AI chip industry.
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