Breaking news

DeepSeek Disrupts AI: Nvidia Faces New Challenge From Bootstrapped Models

DeepSeek has burst onto the scene, shaking up the AI landscape and raising fresh questions for tech giants like Nvidia. After the release of its latest model, DeepSeek-R1, the startup briefly dethroned OpenAI’s ChatGPT as the most downloaded free app on Apple’s App Store—a signal that innovation in AI might soon run on leaner, more efficient models.

A New Paradigm In AI Model Building

DeepSeek’s rapid rise has rattled investors and shifted market sentiment. As Nvidia’s shares tumbled more than 15% in a single day, the spotlight turned to the notion that advanced AI systems might be built with far less compute power than previously assumed. “On one hand, the DeepSeek approach showed that you can optimize your model-building process to require much lower compute power. That has a negative impact on Nvidia,” noted Mohamed Elgendy, co-founder and CEO of enterprise AI platform Kolena. This new wave of bootstrapped foundational models is poised to democratize AI development, potentially expanding the field far beyond the exclusive circle of tech giants.

Nvidia’s Robust Performance Amid Growing Headwinds

Despite the recent shock from DeepSeek’s emergence, Nvidia remains a powerhouse, with its Q4 earnings beating analyst expectations—revenue rose 78% to $39.33 billion, and full fiscal-year revenue surged 114% to $130.5 billion. The company now projects first-quarter revenue of about $43 billion, signaling continued growth driven by its flagship data center business, which now accounts for over 90% of total revenue. Meanwhile, Nvidia’s next-generation AI processor, Blackwell, is experiencing a record ramp-up, with sales already reaching $11 billion in Q4.

However, the AI chip market faces a new twist. CFO Colette Kress explained that “long-thinking, reasoning AI can require 100 times more compute per task compared to one-shot inferences,” highlighting the ever-growing demand for robust infrastructure. CEO Jensen Huang further emphasized that while next-gen models might require astronomical computing capacity, the real challenge lies in deploying them effectively.

Market Competition And Margin Pressures

The competitive dynamics are evolving rapidly. Amr Awadallah, CEO of enterprise AI agent company Vectara, warns that DeepSeek’s lean model-building approach could trigger significant margin compression for AI developers. “Revenue across the industry will continue to grow, but the profit margins for these large AI enablers may shrink considerably,” he said. Investors are already wary, with recent reports of Microsoft scaling back its AI data center expansion, despite its commitment to an $80 billion spend.

Meanwhile, DeepSeek’s performance isn’t without its caveats. Testing reveals that its R1 model hallucinates at a rate of 14.3%—substantially higher than the roughly 2% seen with GPT-4. Yet, industry experts like Elgendy see this as the early phase of a broader trend. “We were operating under the assumption that foundation models require massive resources to build. With DeepSeek, we’re seeing a more efficient approach that could 10x the number of builders and perhaps 100x the number of users,” he projected. This shift could lead to a proliferation of domain-specific models in sectors like healthcare, finance, and research.

A New Era In AI Infrastructure

While Nvidia faces headwinds from these innovative, lower-cost models, it’s clear that competition will only intensify. As the market adjusts to this new paradigm—where traditional, resource-intensive models give way to agile, bootstrapped alternatives—the landscape of AI infrastructure is set for a profound transformation. “The market responded to R1 as if AI was finished,” Huang remarked in a recent pre-taped interview. “It’s exactly the opposite—this is just the beginning.”

As AI continues to evolve, the companies that can adapt to these shifting dynamics and maintain sustainable margins will emerge as the true winners. DeepSeek’s rise is not just a challenge for Nvidia; it’s a harbinger of a more democratized, competitive future in AI development.

Bank of Cyprus Upgrade Signals Fresh Optimism For Greek And Cypriot Banks

Regional Banks Enter A More Favorable Cycle

Bank of Cyprus and Eurobank are well positioned to benefit from a renewed re-rating of Greek and Cypriot bank stocks, according to Cyprus-based investment firm Roemer Capital, which upgraded Bank of Cyprus to a buy rating and reaffirmed its positive view on Eurobank.

The firm cited easing geopolitical tensions, resilient economic growth in Greece and Cyprus, lower funding costs and Greece’s expected transition to developed-market status as the main factors supporting the sector.

Roemer Capital also lowered its cost of equity assumptions, updated its forecasts following first-quarter 2026 results and extended its valuation horizon to the end of 2027, raising target prices across its banking coverage.

Bank Of Cyprus Gets The Largest Upgrade

Bank of Cyprus received the biggest revision, with Roemer Capital upgrading the stock from hold to buy and setting a target price of €11.10, implying potential total upside of 27%.

The firm highlighted the bank’s strong capital generation, profitability and projected 100% dividend payout, describing it as the strongest capital-return story among the banks under coverage. Roemer Capital maintained its buy rating on Eurobank, assigning a target price of €4.90 and forecasting potential upside of 28%. The report said the bank is well placed to benefit from loan growth, improving operating performance and merger-and-acquisition synergies.

National Bank of Greece and Piraeus Bank also retained buy ratings, with expected returns ranging from 25% to 36%. Optima Bank was upgraded to buy, while Alpha Bank remained at hold on valuation grounds.

Why Growth Still Sets The Region Apart

According to Roemer Capital, Greek and Cypriot banks continue to benefit from stronger economic fundamentals than many western European peers. The report pointed to faster economic growth, healthier balance sheets, low levels of non-performing exposures, capital ratios approaching 20% and strong customer deposit bases.

Analysts expect performing loans across the sector to grow at a compound annual rate of 6% to 8% through 2028, supported by private investment, digitalisation, green manufacturing, supply-chain expansion and a gradual recovery in household lending.

The report also said the conclusion of lending under the EU Recovery and Resilience Facility is unlikely to materially affect credit growth, as banks have already shifted back towards traditional commercial lending. Roemer Capital expects Euribor to remain between 2.2% and 2.5%, a level it believes should support both lending activity and net interest margins.

Geopolitics, Valuation And Market Structure Support The Case

The report said improving geopolitical conditions have strengthened the investment outlook, noting that Brent crude prices have largely returned to pre-war levels while Greek government bond yields have stabilised at around 3.5%. Although geopolitical risks remain, Roemer Capital believes the likelihood of a major inflationary shock or significant pressure on bank profitability has eased.

Another important catalyst identified by the firm is Greece’s expected promotion to developed-market status by FTSE Russell, STOXX and MSCI over the coming months.

According to the report, the reclassification should improve liquidity and attract a broader base of international investors. Roemer Capital also said Euronext’s acquisition of the Athens Exchange is expected to strengthen market infrastructure and increase international visibility, particularly for Bank of Cyprus and Optima Bank.

The firm noted that Bank of Cyprus has already benefited from its Athens listing, with average daily trading value increasing from less than €400,000 before its September 2024 move to nearly €6 million afterwards.

Economic Momentum Remains A Core Tailwind

Roemer Capital said both Greece and Cyprus have moved beyond post-crisis recovery and are now supported by private-sector-led growth. For Cyprus, the report highlighted recent tax reform and efforts to simplify the legal and regulatory framework, while also noting that limited foreign banking competition continues to support domestic lenders.

Overall, Roemer Capital expects Greek and Cypriot banks to remain well-positioned for profitable loan growth over the coming years.

Uol
eCredo
The Future Forbes Realty Global Properties
Aretilaw firm

Become a Speaker

Become a Speaker

Become a Partner

Subscribe for our weekly newsletter