DeepSeek almost feels like an overnight sensation. While many people who closely follow the AI landscape may have already been clued in following the release of DeepSeek-R1 on January 20th, the new AI model has been causing waves in the industry and has already had a massive effect on the stock market.

One standout statistic is that Nvidia’s stock price fell by 17% on Monday, and now an Nvidia spokesperson has commented on the new R1 model, calling it “an excellent AI advancement”; many seem caught by surprise by this new China-made model.

DeepSeek R1 model is seen as a breakthrough

To give you the full quote, sourced from CNBC, the spokesperson said that “DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling,” – they go on to say that “DeepSeek's work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant”. R1 is an open-source reasoning model that has reportedly outperformed similar technology from the likes of Open AI at a fraction of the cost, reportedly just $6 million – US models have required spending billions in comparison.

Nvidia’s statement suggests that it sees DeepSeek’s breakthrough model as a positive – not a negative. This is because it should see even more demand for its AI-powered GPUs, with the spokesperson adding that “Inference requires significant numbers of NVIDIA GPUs and high-performance networking”. “We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling.”

Inference refers to a trained AI model making predictions by analyzing new data and it’s something Nvidia has been keen to push with its latest graphics processing units. CEO Jensen Huang previously revealed that its most recent Blackwell AI chips are “progressing smoothly” and offer 30x the performance and efficiency over last-gen during its inference process.

As mentioned above, Nvidia confirms that Deepseek is using export-compliant GPUs – putting down the idea (suggested by Scale AI CEO Alexandr Wang) that the Chinese AI company was using GPUs banned in mainland China. US regulations have caused a split in Nvidia GPUs at the high end, with even the consumer RTX 5090 having two versions; one for the Chinese market.

About the Author

Jack Goodall

At PC Guide, Jack is mostly responsible for reporting on hardware deals. He also specializes in monitors, TVs, and headsets and can be found putting his findings together in a review or best-of guide.