could moderate the rapid pace of AI infrastructure investment, reducing the risk of overcapacity in the sector.
While this may slow outsized revenue growth for AI chipmakers, it could result in a more measured and sustainable investment cycle. Tech stocks tumbled Monday after DeepSeek unveiled its R1 AI model, which claims large language models (LLMs) can be developed on tight budgets. Nvidia () alone lost nearly $589 billion in market cap following the announcement.
Fitch now questions whether hyperscaler investments exceeding $50 billion per quarter are justified, predicting an eventual pause as AI returns fail to keep pace with spending. The shift toward cost-efficient, open-source AI could benefit AMD () and Intel () but may pose challenges for Nvidia, which dominates AI training. Fitch also noted security and geopolitical concerns could limit DeepSeek’s adoption in Western markets.
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