Nvidia Stock Investors Just Got Good News From Meta Platforms and Microsoft

Core Insights - DeepSeek claims to have developed an AI model with performance comparable to leading U.S. models for under $6 million, contrasting sharply with OpenAI's over $100 million investment in GPT-4 [1] - Nvidia's stock experienced a significant decline, losing nearly $600 billion in market value in one day, marking the largest daily loss for any listed company [2] - Concerns arose among investors regarding reduced spending by U.S. companies on Nvidia GPUs, which are typically the most expensive component in AI infrastructure budgets [3] Company Developments - Meta Platforms plans to increase capital expenditures by up to 66% to $65 billion by 2025 to support generative AI and core business, a notable acceleration from a 39% increase last year [4] - CEO Mark Zuckerberg emphasized that heavy investments in AI will provide a strategic advantage, and efficient training methods do not diminish the need for AI chips [4][5] - Microsoft CEO Satya Nadella reported significant efficiency gains in AI training and inference, predicting exponential demand growth as AI becomes more affordable [5] Economic Implications - The Jevons paradox suggests that more efficient AI training methods will lead to increased demand for AI software and services, potentially offsetting cost savings from improved GPU price performance [6][7] - Following DeepSeek's report, Morgan Stanley analysts revised capital expenditure estimates, projecting a 32% increase in AI infrastructure spending among major hyperscalers to $317 billion by 2025 [8] - Despite the negative news, Nvidia maintains a median target price of $175 per share among analysts, indicating a potential upside of 45% from its current price of $120 [9]