One of the biggest beneficiaries of this trend is Nvidia (NASDAQ: NVDA), which pioneered the graphics processing units (GPUs) that have become the gold standard for running AI systems. However, reports emerged recently that suggested a Chinese start-up had cracked the code for developing strong AI systems while using inferior chips and novel training processes.

Since the start of 2023, Nvidia's (NASDAQ: NVDA) stock has gained an astronomical 906% as of the time of writing. While this is common investor thinking, it's caused many (including myself) to miss a large chunk of Nvidia's rise.

Nvidia remains strong in AI, but DeepSeek’s model disrupts its core advantage. Discover why NVDA stock may be overvalued despite AI growth potential.

Investors spent much of 2024 looking for less crowded trades set to gain from the AI boom. This week, many of those names got caught in the historic sell-off.

Nvidia on Monday said Chinese AI firm DeepSeek's advances show the usefulness of its chips for the Chinese market and that more of its chips will be needed in the future to meet demand for DeepSeek's services.