According to Jensen Huang, the founder and CEO of Nvidia, the market has misjudged the technological advancements of DeepSeek and their potential impact on the chipmaker’s business.

In a pre-recorded interview with Alex Bouzari, CEO of DataDirect Networks, which was released on Thursday, Huang expressed his enthusiasm for DeepSeek’s R1 open source reasoning model, describing it as “incredibly exciting”. The interview can be found here.

Huang stated, “I think the market responded to R1 with the assumption that AI is finished, that it has reached its peak and no further computing is required. However, this is the complete opposite.” He emphasized that the release of R1 is actually beneficial for the AI market and will accelerate its adoption, rather than rendering computing resources like those produced by Nvidia obsolete.

Huang explained that the release of R1 has brought attention to the potential for more efficient models, which will in turn expand and accelerate the adoption of AI. He noted that despite DeepSeek’s advancements in pre-training AI models, post-training remains a crucial and resource-intensive process.

As Huang pointed out, “Reasoning is a compute-intensive aspect of AI,” highlighting the ongoing importance of compute resources in the field.

Nvidia declined to provide further commentary on the matter.

Huang’s comments come nearly a month after DeepSeek released the open source version of its R1 model, which had a significant impact on the AI market and particularly affected Nvidia, causing its stock price to plummet 16.9% in a single market day.

According to data from Yahoo Finance, Nvidia’s stock closed at $142.62 per share on January 24. However, by the following Monday, January 27, the stock had dropped to $118.52 per share, resulting in a loss of $600 billion in market cap over the course of three days, as reported by TechCrunch.

Since then, Nvidia’s stock has largely recovered, opening at $140 per share on Friday, which means the company has nearly regained its lost value in about a month. The company is set to report its Q4 earnings on February 26, which will likely address the market reaction in more detail, and can be found on the Nvidia investor website.

In related news, DeepSeek announced on Thursday that it plans to open source five code repositories as part of an “open source week” event, as reported by TechCrunch.