I get the stupid basic excuse about big tech purchasing loads of silicon. That reasoning seems deeply flawed and idiotic to me. If Deepseek R1 democratizes training more for less, then that means customers with mid to small size data centers like universities now have access to train and research models in this space. Nvidia does not have a real competitor, so they get the sale. Their potential customer base just grew exponentially right? OpenAI should be devalued massively by this change, but I don’t see why anything impacts Nvidia negatively in this instance. Am I missing something or is the market this level of stupid? (I have no skin in this game)
I think it’s not really rooted in facts. AI is an unsubstantiated hype and the stock market is a bubble. People seemed to have been under the impression, that OpenAI was going to invest several trillions(!) of dollars into Nvidia chips. To me, that always seemed a bit unrealistic. But that’s what inflated the Nvidia stock. And now it turns out, to everyones’ surprise, that OpenAI isn’t the only company who can do AI. And that AI is making advancements and is getting better and more efficient all the time… So that trillion dollar bubble collapses.
To me, that’s just silly. AI making progress was the very reason for those people to invest in it. Plus it’s not like there is another company manufacturing the chips… Deepseek used Nvidia chips. So IMO they proved they’re even better than people previously thought and there is room for improvement… But seems to me the stock market is set on doing it one specific and ineffective way, so it theoretically would need more hardware to do AI.
I think it’ll turn out the opposite. The better AI gets, the more it’ll get adopted. And that’ll lead to more sales, not less. And if Nvidia hardware turned out to be better than we thought, it just proves they’re ahead of their competition. So even more reason to invest in them. But the stock market sometimes just does silly things and isn’t focused on long term goals.