Nvidia's Chip Demand Faces Scrutiny as DeepSeek Stirs Doubts on AI Spending

Nvidia and Deepseek logos are seen in this illustration taken, January 27, 2025. REUTERS/Dado Ruvic/Illustrationo/File Photo
Nvidia and Deepseek logos are seen in this illustration taken, January 27, 2025. REUTERS/Dado Ruvic/Illustrationo/File Photo
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Nvidia's Chip Demand Faces Scrutiny as DeepSeek Stirs Doubts on AI Spending

Nvidia and Deepseek logos are seen in this illustration taken, January 27, 2025. REUTERS/Dado Ruvic/Illustrationo/File Photo
Nvidia and Deepseek logos are seen in this illustration taken, January 27, 2025. REUTERS/Dado Ruvic/Illustrationo/File Photo

Demand for Nvidia's pricey artificial intelligence chips will be in focus when the company reports results on Wednesday as investors doubt the hefty spending on the technology after low-cost AI models from China's DeepSeek rattled the industry.

The world's second most valuable company has been the top beneficiary of an AI-driven spending spree by big technology companies over the past two years.

But claims that DeepSeek's AI models rival its Western counterparts at a fraction of the cost has led some investors to ask if Nvidia's cutting-edge chips are essential for gaining an edge in AI race.

DeepSeek's sudden rise in January resulted in Nvidia losing $593 billion in market value, the largest one-day loss for any US company. Its shares were one of the best performers in 2023 and 2024, Reuters reported.

"Investors have been very concerned about DeepSeek and the impact that it will have on demand," said Ivana Delevska, chief investment officer of Spear Invest, which holds Nvidia shares in an actively managed exchange-traded fund.

"So if they (Nvidia) can show that they're still able to 'beat and raise', it would be pretty positive for the stock."

Nvidia is expected to report a 72% surge in revenue to $38.05 billion in its fourth quarter, according to LSEG data, its slowest growth in seven quarters. It is likely to forecast a 60% jump in revenue for the first quarter ending April.

In contrast, the company's revenue has seen five straight quarters of triple-digit growth until the quarter ended October.

So far, demand for Nvidia's AI chips has not faltered. Big customers such as Microsoft and Meta have said they plan to plow ahead with their steep data-center spending.

"The CapEx plans communicated by Meta, Microsoft, Google and Amazon ..... paint a very positive picture of the near-term demand backdrop for Nvidia," said John Belton, a portfolio manager at Gabelli Funds which holds Nvidia shares.

Meanwhile, shipments of Nvidia's powerful Blackwell chips are expected to have accelerated in the fourth quarter, boosting its revenue but squeezing its margin due to the cost of ramping a new and complex chip.

Analysts expect Nvidia's adjusted gross margin to shrink by more than three percentage points to 73.5% in the fourth quarter.

With Blackwell series, Nvidia is shifting from selling individual chips to full AI computing systems such as the GB200 NVL72, which bundle GPUs, CPUs and networking equipment.

That has further complicated a costly and time-consuming production ramp-up.

Its contract manufacturer, Taiwan's TSMC, scrambled to expand capacity for advanced packaging - a complex process that glues together chips and is the main bottleneck in AI semiconductor supply chains.

Blackwell's rollout was also hampered by design flaws and low chip yields — although Nvidia has since fixed the issues.

In November, it said Blackwell would exceed initial revenue projections of several billion dollars in the fourth quarter. "Blackwell has been a complicated set of products to launch," said .

"With the magnitude of out-performance that investors have become used to - Nvidia's delivery could be smaller this time around, just given some of these dynamics with the Blackwell launch."



Sam Altman Says Meta Offered $100 Million Bonuses to OpenAI Employees 

The logo of Meta is seen at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, June 11, 2025. (Reuters) 
The logo of Meta is seen at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, June 11, 2025. (Reuters) 
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Sam Altman Says Meta Offered $100 Million Bonuses to OpenAI Employees 

The logo of Meta is seen at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, June 11, 2025. (Reuters) 
The logo of Meta is seen at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, June 11, 2025. (Reuters) 

OpenAI CEO Sam Altman said Meta has offered his employees bonuses of $100 million to recruit them, as the tech giant seeks to ramp up its artificial intelligence strategy.

The alleged attempts by Meta to hire OpenAI staffers are the latest signs of a frenzy to hire top engineers to develop AI models, and they come at a time when the Facebook owner is working on building its superintelligence unit to catch up with competitors.

Competition for AI talent has reached a feverish pitch as superstar researchers are being courted like professional athletes on the belief that individual contributors can make or break companies.

"They (Meta) started making giant offers to a lot of people on our team," Altman said on the Uncapped podcast that aired on Tuesday, hosted by his brother. "You know, like $100 million signing bonuses, more than that (in) compensation per year."

"At least, so far, none of our best people have decided to take them up on that," Altman said.

Meta did not immediately respond to a request for comment outside regular business hours, and Reuters could not verify the information.

"I've heard that Meta thinks of us as their biggest competitor," Altman said.

His comments come just days after Meta invested $14.3 billion in data-labeling startup Scale AI, and hired its top boss, Alexandr Wang, to lead its new superintelligence team.

Meta, once recognized as a leader in open-source AI models, has suffered from staff departures and has postponed the launches of new open-source AI models that could rival competitors like Google, China's DeepSeek and OpenAI.