About a week ago, I started writing an article about how the AI bubble would burst. I deemed the biggest problem with AI to be its demanding hardware requirements.
I thought AI requiring millions of Nvidia GPUs was never going to be sustainable long-term.
Once the world figured this out, I thought AI companies like OpenAI and Nvidia would collapse. And they did collapse...just for the opposite reason.
Whereas models like ChatGPT have had billions of dollars thrown at them, the latest AI model DeepSeek has released after less than $10 million in funding.
Normally, this wouldn't mean much. But when you consider that DeepSeek beats ChatGPT at many key metrics, that really calls into question the necessity of all this funding and Nvidia's GPUs.
Hence why Nvidia's stock crashed.
And all this didn't happen because AI needed too many GPUs, but because AI didn't need them to begin with.
AI's biggest limiter was the hardware it needed to run. But if DeepSeek is a taste of what's to come, then there might be nothing in the future to limit AI.
I originally couldn't see AI replacing my job as a developer. And to be fair, AI still has lots of problems (case in point: hallucination).
But now I'm starting to feel just a little more worried.
While DeepSeek is certainly impressive, it is too early to come to any definitive conclusion. In fact, there is lots of evidence mounting up against AI collapsing:
- DeepSeek itself uses Nvidia hardware
- ChaptGPT still beats DeepSeek at creative tasks
- Nvidia hardware could still be used to improve DeepSeek
At the time of writing this article, Nvidia's stock has been slowly climbing its way back up. Perhaps DeepSeek isn't as impressive as the media is making it out to be.
Despite their stock going down, I only see it going back up. Whether it's OpenAI or DeepSeek, AI needs its GPUs. And Nvidia will be there to meet the demand.
This is not financial advice...don't buy a stock because a random article said it might go up.
The real companies that should be worried are OpenAI and other AI firms. Because if DeepSeek can be even close to as good as you are for 0.01% of the cost...you should be worried.