American chip maker Nvidia (NVDA) is under fire from Congress for allegedly providing technical support to China’s DeepSeek, which helped develop AI models potentially used by the Chinese military. In a letter, U.S. Commerce Secretary Howard Lutnick and Rep. John Moolenaar (R-Mich.), chair of the House Select Committee on the Chinese Communist Party, accused Nvidia of offering “extensive technical support” that boosted DeepSeek’s efficiency. NVDA stock fell marginally in extended trading on the news.
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The committee revealed that Nvidia engineers collaborated with DeepSeek on an “optimized co-design of algorithms, frameworks, and hardware.” This enabled DeepSeek-V3 to complete full training in just 2.788 million H800 GPU hours, far fewer than is typical for U.S. developers. GPU hours measure the time AI chips run to train a model; frontier-scale models are cutting-edge systems from leaders like OpenAI, Anthropic, or Alphabet’s (GOOGL) Google.
Key Background of the Allegations
Last year, DeepSeek launched its low-cost, efficient R1 model, trained with fewer parameters, lower chip specifications, and cheaper resources compared to Nvidia’s typical setups. The release shook global markets and sparked an AI arms race between the U.S. and China. Washington grew concerned that China was gaining an AI lead and bypassing U.S. chip export restrictions.
In 2024, DeepSeek operated as a standard commercial entity, so Nvidia treated it as a “legitimate commercial partner deserving of standard technical support,” as per the letter. Nvidia had designed the H800 chip specifically for China and sold it there before U.S. export controls took effect in 2023. Reuters reported last year that U.S. officials suspect DeepSeek aids China’s military while evading those controls.
Nvidia Denies Wrongdoing
Nvidia has rejected all the allegations. “China has more than enough domestic chips for all of its military applications, with millions to spare,” the company told Reuters. “Just like it would be nonsensical for the American military to use Chinese technology, it makes no sense for the Chinese military to depend on American technology.”
The controversy unfolds amid shifting U.S. policy. The Trump administration recently approved exports of Nvidia’s H200 chips to China under strict restrictions. Yesterday, China cleared the first batch of H200 chips for import. Lawmakers criticize the decision, warning it could boost Beijing’s military and erode U.S. AI dominance.
Is Nvidia Still a Good Stock to Buy?
On TipRanks, Nvidia stock has a Strong Buy consensus rating based on 39 Buys, one Hold, and one Sell rating. The average Nvidia price target of $264.09 implies 37.9% upside potential from current levels. Over the past year, NVDA shares have surged over 54%.
