In a Wednesday interview with CNBC’s Jim Cramer during Nvidia’s annual GTC conference, CEO Jensen Huang discussed the significant impact of Chinese startup DeepSeek’s new artificial intelligence model, R1. Huang highlighted that this model, while groundbreaking, will require far more computation than previously anticipated.
Huang referred to DeepSeek’s R1 as “fantastic” because it is the first open-sourced reasoning model. The model breaks down problems step-by-step, provides multiple answers, and even verifies the correctness of its conclusions. He added, “This reasoning AI consumes 100 times more compute than a non-reasoning AI,” pointing out that this conclusion was the opposite of what many in the industry had initially expected.
The announcement of DeepSeek’s model in late January triggered a major sell-off in AI stocks, as investors feared that the new model could match the performance of top competitors while consuming less energy and cost. Nvidia saw a dramatic 17% drop in stock value, losing nearly $600 billion, marking the largest single-day loss in U.S. corporate history.
Nvidia’s Plans and AI Infrastructure
During the interview, Huang also spoke about the innovations Nvidia showcased at the conference, including new AI infrastructure aimed at robotics and enterprise sectors. Nvidia has forged significant partnerships with industry giants like Dell, HPE, Accenture, ServiceNow, and CrowdStrike to bolster its AI-focused efforts. Reflecting on the AI boom, Huang observed that the focus has shifted from generative AI to reasoning models, predicting that global computing capital expenditures will reach $1 trillion by the end of the decade, with the majority directed towards AI.
“So, our opportunity as a percentage of a trillion dollars by the end of this decade is quite large,” Huang said, emphasizing the substantial infrastructure needs Nvidia is set to address.
Author’s Opinion
While Nvidia’s investment in AI infrastructure and partnerships positions it well for future growth, the risks associated with rapidly changing AI technologies—like DeepSeek’s new model—could disrupt its dominance. If competitors continue to innovate in energy-efficient AI models, Nvidia may need to adapt quickly to maintain its market leadership.
Featured image credit: Wikimedia Commons
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