Nvidia calls China’s DeepSeek R1 model ‘an excellent AI advancement’

Nvidia called DeepSeek's R1 model "an excellent AI advancement," despite the Chinese startup's emergence causing the chip maker's stock price to plunge 17% on Monday.

"DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling,"  an Nvidia spokesperson told CNBC on Monday. "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."

The comments come after DeepSeek last week released R1, which is an open-source reasoning model that reportedly outperformed the best models from U.S. companies such as OpenAI. R1's self-reported training cost was less than $6 million, which is a fraction of the billions that Silicon Valley companies are spending to build their artificial-intelligence models. 

Nvidia's statement indicates that it sees DeepSeek's breakthrough as creating more work for the American chip maker's graphics processing units, or GPUs. 

"Inference requires significant numbers of NVIDIA GPUs and high-performance networking," the spokesperson added. "We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling."

Nvidia also said that the GPUs that DeepSeek used were fully export compliant. That counters Scale AI CEO Alexandr Wang's comments on CNBC last week that he believed DeepSeek used Nvidia GPUs models which are banned in mainland China. DeepSeek says it used special versions of Nvidia's GPUs intended for the Chinese market.

Analysts are now asking if multi-billion dollar capital investments from companies like Microsoft, Google and Meta for Nvidia-based AI infrastructure are being wasted when the same results can be achieved more cheaply. 

Earli