The US chips sector stocks started the day off in the red today on rumors(??) that Deepseek is developing their own AI chips.
Anyone want to guess which stock took got hit most today on this? If you guessed Nvidea, you would be right! But let me ask you this.. Are you really surprised on this news? I guess this wasn’t on my bingo card this week but am I suprised by this? Not really.
Over the past year, every large chip and frontier model player in this market has ventured into announcing that they would be making their own AI chip. Apart from Nvidia’s chief chip rival AMD, we have had both Google with their TPU and Amazon with their Trainium chip that have been strong players and competitors in this space. Then we had Meta announce they are building their own AI chip with help from Broadcom.
And then last few months we have had a flurry of announcements from even “smaller” players. The most recent of them was Qualcomm announcing a $5B Data center roadmap as part of their recent June 2026 Investor Day.
So the news that DeepSeek is looking at developing their own AI chip to reduce their reliance on Nvidia chips shouldn’t come as a surprise to anyone. And yet, Nvidia stock took a hit on this rumor. I say rumor only because its uncomfirmed and will likely remain so given it’s Deepseek. But still even if it is confirmed, IMO it really shouldn’t matter.
Nvidia revenue forecast already assumes no China revenue for the forseable future and analysts aren’t baking in any percent chance that will change. So if revenue numbers already assumes zero, then what does this news change for Nvidia? May be sentiment that China players are gonna get more self dependent on home made chips? or is it that China chips may eventually become competitors on the global stage? If it is the later, let me ask you again, are you surprised by this? Hint, if you are, then you would be part of “squares” and not “sharps”.
Anyway, I felt writing about this mainly because I see today’s news a nothing burger and today’s action as a knee jerk reaction to a not new news. Anyway, if you didn’t have enough allocation to Nvidia stock in your portfolio, today provided yet another entry for this stock where it dipped to previous support levels. As for me, inaction is my action today. Stay put, observe the news and reflect nothing changed in my investing thesis. I hope you feel that same!