META Stock Gains, NVDA Remains a Strong Bet After the DeepSeek Storm

A new artificial intelligence (AI) breakthrough by the China-based company DeepSeek has raised questions about the future of AI investments. Their model, R1, rivals top AI systems while being more cost-effective, which caused NVIDIA’s NVDA stock to plummet. Meanwhile, Meta Platforms Inc. META, which embraces open-source AI, seems to benefit from this innovation. Now, the billion-dollar question is whether META presents a more promising short-term investment than NVDA and explores the potential for the latter’s recovery in the long term.DeepSeek Frenzy & its Initial Market ImpactRecently, DeepSeek became the most downloaded free app on Apple’s AAPL U.S. store. This caused a big shake-up in the stock market. Investors panicked, thinking DeepSeek’s AI technology could compete with OpenAI (creator of ChatGPT) while using less computing power. This scared people because companies like NVIDIA make expensive chips used for AI, and if a competitor can do the same with cheaper tech, it could hurt NVDA’s business. Because of this fear, the stock price of technology and AI-related stocks like NVIDIA declined drastically. Meta Investors Held Their NerveMeta supports open-source AI, signifying that Meta shares its AI tools and technologies with the public for free. Other companies or developers can use these tools to build their own AI systems or improve existing ones. This is beneficial because it encourages innovation—more people working on AI means faster improvements and new ideas that can push the technology forward.Now, DeepSeek could refer to another company or project that’s innovating in the AI space. When DeepSeek comes up with something new or useful in AI, Meta can benefit from that because it’s open-source.So, if DeepSeek makes a breakthrough in AI, Meta can use that to improve its own products or AI. It's like sharing the tools for a project, and everyone can help make it better together. This strategy enables Meta to maintain its edge in the rapidly evolving AI landscape, driving its stock upward.Is NVDA in Trouble?While DeepSeek claims to have developed a cost-efficient AI model, its performance doesn’t match that of its U.S. counterparts. DeepSeek's AI struggles with basic tasks and delivers inconsistent results when handling complex data, making it less accurate and reliable than the cutting-edge models developed by leading tech firms.Moreover, creating a truly competitive AI system isn’t just about using cheaper chips. It requires massive infrastructure, including data centers, high-performance servers and specialized technologies like cooling systems and software optimizations. Additionally, significant research and development investments are necessary to refine and scale AI capabilities. Without these critical components, an AI model may appear impressive on the surface but lack the depth and robustness needed for widespread adoption.In the end, many analysts maintained that the fall in NVDA's stock price was an overreaction. In reality, NVDA's technology remains essential for AI development, and the demand for its chips is likely to increase.NVDA or META: Which is the Better Stock?Meta and NVDA are both big players in AI, but Meta, carrying a Zacks Rank #3 (Hold), may have a short-term advantage due to its open-source strategy. NVDA, carrying a Zacks Rank #2 (Buy) despite the recent hit, is expected to remain strong in the long run. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks