Nvidia investors learned a painful lesson last week: to quote Interactive Brokers strategist Steve Sosnick, even disrupters get disrupted.
Now, we can’t say just yet that the arrival of Chinese AI start-up Deepseek will actually disrupt Nvidia’s incredibly profitable business model. Some analysts claim the panic – Nvidia lost a record-breaking $589 billion (€567 billion) in market capitalisation in a day – is excessive. Some say Deepseek’s impact may actually be positive for Nvidia, by driving increased demand for its AI chips.
Additionally, Sosnick himself notes there is “not a lot of transparency” about Deepseek’s claim to have built a ChatGPT-like model for just $6 million.
Nevertheless, says Sosnick, we know from history that competition is inevitable. During the dotcom bubble, Cisco was priced to rewire the world, Yahoo was the search engine of choice, and people used Compaq and Sun Microsystems computers. Neither Google nor Facebook even existed.
“You can’t assume that current winners will remain winners,” says Sosnick. That’s echoed by Davy’s Aidan Donnelly: “Even the best moats in the world can spring a leak.”
- Sign up for the Business Today newsletter and get the latest business news and commentary in your inbox every weekday morning
- Opt in to Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
