DeepSeek, one of China’s top AI companies, is now using Huawei’s AI chips to train some of its models, which is a sign that it’s starting to reduce its reliance on chipmaker Nvidia (NVDA). This move comes as the Chinese government pushes tech firms to adopt locally made chips after years of U.S. export restrictions on advanced chips. While DeepSeek still uses Nvidia chips for its most powerful models, choosing Huawei for smaller ones is a major step toward using more domestic technology.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Indeed, the company has tested chips from other Chinese firms like Cambricon and Baidu (BIDU), but ultimately partnered with Huawei to use its Ascend chips for the upcoming R2 models. Although these models haven’t launched yet, DeepSeek is working closely with Huawei engineers to make sure they run efficiently. Since DeepSeek’s earlier models were built around Nvidia’s hardware and software, switching to Chinese chips is a challenge. However, DeepSeek is known for building powerful AI systems at lower costs, and this collaboration could help Huawei improve its chip software and attract more developers.
At the same time, Nvidia’s position in China is becoming more uncertain, as U.S. policies keep changing. In fact, initially, the U.S. banned the sale of its chips, but later allowed the sale of less powerful Nvidia chips to China, along with a proposal that Nvidia share 15% of its Chinese revenue with the U.S. government. However, China’s regulators responded by telling companies to stop buying Nvidia chips due to security concerns.
What Is a Good Price for NVDA?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 34 Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $211.97 per share implies 22.1% upside potential.
