Nvidia’s artificial intelligence chip sales are under scrutiny as competition from lower-cost AI models, such as China’s DeepSeek, raises concerns about the sustainability of high AI spending.
Nvidia remains the top beneficiary of AI-driven investments by major tech firms over the past two years, while DeepSeek claims to offer AI models at a fraction of the cost, prompting questions about the necessity of Nvidia’s expensive chips.
DeepSeek’s rise in January led to a $593 billion drop in Nvidia’s market value, the largest single-day loss for any U.S. company. Despite this, its stock remained one of the top performers in 2023 and 2024.
Nvidia is expected to report a 72% increase in revenue to $38.05 billion for the fourth quarter, marking its slowest growth in seven quarters. The company is likely to forecast a 60% rise in revenue for the first quarter ending in April.
Demand for Nvidia’s AI chips remains strong, with major customers like Microsoft and Meta continuing to invest heavily in data centers. The company’s latest Blackwell series chips are expected to boost revenue, though the cost of ramping up production could pressure margins.
Blackwell marks Nvidia’s shift from selling individual chips to full AI computing systems, which include GPUs, CPUs, and networking equipment. The transition has introduced production challenges, with contract manufacturer TSMC struggling to expand capacity for advanced chip packaging.
Despite some early design and yield issues, Nvidia has resolved problems with Blackwell and expects its sales to exceed initial projections. However, with production hurdles and rising competition, its ability to maintain strong growth remains in focus.
