Investing.com -- Shares of Super Micro fell sharply by 10% in pre-open trading Monday amid investor concerns over the potential impact of a new AI model introduced by China-based startup DeepSeek. Dell (NYSE:DELL) also saw its shares decline by 7%, as the new AI model is believed to require less investment in AI infrastructure, potentially affecting demand for AI servers.
DeepSeek's announcement of its new AI model has sparked fears within the AI industry, as the model is said to be capable of competing with leading products from OpenAI and Meta Platforms (NASDAQ:META) for a fraction of the cost.
Bernstein analysts acknowledged the impressiveness of DeepSeek's new models but viewed the market's reaction as exaggerated.
Bernstein analysts provided context to the situation, stating, “If we acknowledge that DeepSeek may have reduced costs of achieving equivalent model performance by, say, 10 [times], we also note that current model cost trajectories are increasing by about that much every year anyway [...] which can’t continue forever.”
Cantor analyst C.J. Muse raised questions about the legitimacy of DeepSeek's claims regarding the cost and efficiency of their model. Muse highlighted discrepancies in reported GPU usage and questioned DeepSeek's transparency amidst a "GPU embargo." Despite these concerns, Cantor's analysis suggests that the advancements implied by DeepSeek's model are a bullish sign for the AI industry, indicating that significant progress toward AGI, or Artificial General Intelligence, may be closer than previously thought.
The skepticism from analysts arises as the AI sector grapples with the implications of more cost-effective AI models that could disrupt the current trajectory of investment in AI infrastructure. As the market digests the news, Super Micro and Dell's stock movements reflect broader industry uncertainty about the future of AI hardware requirements and the potential for a shift in the competitive landscape.
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