Despite the recent decline in Nvidia shares following the emergence of Chinese AI startup DeepSeek, Jim Cramer advises caution and refrains from declaring a buying opportunity. He acknowledges the uncertainty surrounding DeepSeek's claims and the potential impact on Nvidia's future.
Jim Cramer stated on Monday that there's no need to panic sell Nvidia shares due to the emergence of Chinese AI startup DeepSeek. However, he also cautioned that it's premature to determine if the recent decline represents a buying opportunity. \'I do not have the knowledge to be able' to say buy the dip in Nvidia ,' Jim said before the opening bell on Monday. 'Sometimes you have to admit ... I'm not sure what to do. It's not a cop out. I'm not sure what to do,' he added.
\Shares of Nvidia, the industry leader in artificial intelligence chips, plummeted over 11% in early trading, contributing to a broader sell-off in stocks associated with the AI sector. This market reaction followed investors grappling with the implications of DeepSeek's new AI model and chatbot. The tech-heavy Nasdaq Composite also experienced a decline of approximately 3%, while the S&P 500 lost about 1.7%. \DeepSeek asserts that its model was trained on older versions of Nvidia's high-powered AI chips and its development cost a fraction of what major U.S. tech companies like Meta Platforms have invested in their respective AI endeavors. While AI experts generally commend DeepSeek's capabilities—its app quickly ascended to the No. 1 spot on Apple's App Store, surpassing OpenAI's ChatGPT—there are doubts regarding the veracity of its claims. Analysts at Citigroup, for instance, expressed skepticism about DeepSeek's claim of achieving these feats without utilizing advanced GPUs at some point during development. \At the heart of the matter lies the question: If DeepSeek successfully created a competitive, cost-effective AI model, will companies need to invest as heavily in Nvidia's latest and most advanced chips? Jim emphasizes that while attempting to answer this question, he continually returns to recent pronouncements by Meta CEO Zuckerberg and Oracle's Larry Ellison. \Meta's projected capital expenditures for 2025 and Oracle's involvement in a substantial data-center expansion initiative signal their intention to continue investing billions in AI, with a significant portion likely flowing into Nvidia's coffers. 'When in doubt, do you go against Zuckerberg? Do you go against Ellison? I come back and say, I don't know. Sometimes it's better to say I don't know,' Jim stated. \Jim and Director of Portfolio Analysis Jeff Marks will delve further into DeepSeek and its potential ramifications for the rest of their stock portfolio during the Morning Meeting, which commences at 10:20 a.m. ET as usual. (Jim Cramer's Charitable Trust holds NVDA and META. For a comprehensive list of the stocks, please refer to the provided link.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim executes a trade. Jim adheres to a 45-minute waiting period after sending a trade alert before making a purchase or sale in his charitable trust's portfolio. If Jim has discussed a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. \THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED
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