CNBC's Jim Cramer weighs in on the market reaction to DeepSeek's new AI model, suggesting that Nvidia's massive sell-off might be an overreaction. He argues that while DeepSeek's entry poses a potential challenge to Nvidia's dominance, it's unlikely to completely displace the company. Cramer also questions whether Big Tech companies were caught off guard by DeepSeek's emergence.
After a market-wide panic over AI start-up DeepSeek, CNBC's Jim Cramer reflected on what the new player's entrance into the arena means for Big Tech. The full picture is not yet clear, and Nvidia might have sold off too hard, he said, stressing that investors would have been wise not to make any sudden moves. 'When things are complicated or murky, it might not make sense to help create the biggest single day dollar loss in history,' he said. 'There's a better way.
Just don't do anything—if you really want to sell, you can do it into the rebound the next day.' The market reacted dramatically to news of DeepSeek, which unveiled a new AI model reportedly more advanced and cheaper to run than existing popular models like OpenAI's. Investors worried that this new player would significantly impact Nvidia's profits, as Big Tech companies might reduce their need to purchase as many of its chips. Despite the gigantic loss, Nvidia stock managed to rally during Tuesday's session, up nearly 9% by close.Cramer acknowledged that it's possible companies might need fewer Nvidia chips if they can get more use out of existing products or if a new advanced AI model can run on less powerful hardware. But he suggested it's not that simple, saying there are likely some innovations that DeepSeek alone won't be able to accomplish, like creating specialized humanoid robots or self-driving cars. He also questioned whether data would be secure with DeepSeek. Cramer also wondered whether news about DeepSeek blindsided tech big wigs the same way it shocked the market. He said it's possible that big Nvidia buyers like Microsoft and Google were unaware of DeepSeek's development. 'Do you really think they didn't know anything about this? Were they as clueless as the people who sold Nvidia into yesterday's vortex?' Cramer asked. 'Somehow, I don't think that makes a lot of sense.'
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