With the launch of Chinese AI startup Deepseek, a shock wave has been sent through the AI sector recently. Stocks like Nvidia have plunged double-digit numbers into the news as new competitors threatened to promote the AI ecosystem.
The open source model, Deepseek, outlined how to achieve similar results as models such as Openai’s ChatGpt, but at a much lower cost. In fact, the company said it spent just $5.5 million to train chatbots, but accused Openai of being “distilled.” That is, he said he trained his own model using Openai’s models without permission.
Two weeks after the sale, panic around Deepseek appears to have subsided, but stocks that have fallen into the news have not fully recovered. As of February 7, Nvidia is 10% lower than the location that closed on January 24, losing more than $300 billion in value.
There is still a lot of uncertainty about how DeepSeek will affect the AI sector in the long term, but it is still a big part of spending on AI infrastructure, following major tech companies like Microsoft, Meta Platforms, Alphabet and Amazon. It seems unlikely that a scaled ramp up would derail. All have announced plans to significantly increase capital expenditures to build cloud infrastructure and AI capabilities.
There was another comment from ARM Holdings (arm -1.51%)) CEO Rene Haas should also give investors confidence.
Haas said Deepseek is good for the AI industry and for the ARM. Commenting on recent forecasts of capital expenditures, he admitted, “No one is pulling back, and the reason is not close to the capabilities that could be transformative in terms of what AI can do.” .
Referring to Deepseek, he added: In areas where efficiency is important, that is our sweet spot. ”
Image source: Getty Images.
Why ARM can take advantage of opportunities
The ARM’s design and licensed CPU and other semiconductor architectures, as well as the company’s historical strength, is that its architecture is suitable for saving battery power. It’s more efficient than the X86 for Intel and Advanced Micro devices than the alternative.
As CFO Jason’s kids pointed out in an interview with The Motley Fool, ARM is the only company with chips everywhere, from the cloud to virtually any edge device, and the company has a cloud hyperschool investment in AI. We have set up our own to make use of both. Confusion from Deepseek.
Technologies like DeepSeek need to accelerate the development of technologies such as Edge AI, or programs like Apple Intelligence where computing is done on devices rather than on data centers. Chips benefit the arms as they dominate edge devices such as smartphones, especially those with low power consumption, as chips dominate devices with batteries.
As ARM has built relationships with many cloud infrastructure companies, it should benefit from the increased CAPEX from these companies. For example, CPU licenses are available in Amazon Web Services’ Graviton, Microsoft Cobalt, and Google Axion, while Grace CPUs are within the Nvidia Superchips range.
As ARM’s market share in cloud computing has improved from 9% in 2022 to 15% in 2024, there is a great opportunity to win even greater shares, as it appears to be in the partnership mentioned above. there is.
It’s too early for AI
Technology companies will continue to invest in AI until they reach artificial general information (AGI) and artificial emergency intelligence (ASI), and CFO children will be computationally intensive to reach it He insisted that it would become. DeepSeek development does not change its trajectory.
DeepSeek could potentially generate separate sets of expensive, low-power applications like Edge AI, but the goal remains a more powerful AI with countless applications in robotics, automation and more.
Its strong market share is at the edge, and with its close partnership with Cloud Hyperscaler, AR looks to be in a unique position to win no matter what direction AI goes. choice.
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