- cross-posted to:
- news@hexbear.net
- cross-posted to:
- news@hexbear.net
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Massively overvalued stocks the second an actual competitor pops up:
It’s a huge sell off. We’re talking not just Tech utilizing AI. We’re talking about Power Companies, both Green and Nuclear, Cooling System providers, Data center construction companies. If it had its hands in AI somewhere, its tanking today.
Mashallah
My exact sentiments 💯
I honestly didn’t think investors would be scared from their own madness this easily.
This just means some whales cashed in
what do you think so far yog? correction? or something more?
Sudden realization that AI may not be as profitable as once thought. If OpenAI and Meta are being threatened by a small, one-year-old startup, then maybe their AI tech isn’t really that unique or innovative.
Sudden realization that AI may not be as profitable
I’m a rube but I don’t think it is this. At least not yet. I think it’s about how (relatively) cheaply Deepseek was prepared/trained/idk. It just throws a spanner in the works of the Nvidia shovel sale in the path to the eventual alleged profits.
That’s the same thing. Profitability requires some aspect of anti-competitive conditions. The narrative of US AI giants was that they were going to be a runaway success that no one could catch up with because of compounding advancements that build on themselves.
DeepSeek being competitive without the same investment throws the whole hypothesis for profit out the window. The profit can only be made if there isn’t a competitive landscape driving prices down. If there are a bunch of competitive offerings, they will compete on price, reducing margins, and therefore not generating the expected ROI
It’s not the same thing because the whole valuation of the LLM-based AI sector is on the basis of what it can possibly be capable of at some point in the future even though it is unreliable today. The hope is that this AI continues to improve at a constant rate and can reduce every corporation’s biggest expense (labour cost) reliably soon. Deepseek’s success does not do anything to bring sobriety to this view. It just shows tbat you can bring about comparable performance at a fraction of the resource usage.
No, that’s not how investment works. Investors expect returns when they make an investment. Investors invested in Nvidia expecting Nvidia to be the vehicle by which they make their returns. If someone else reduces labor cost for the market, Nvidia doesn’t capture any of that value, and therefore cannot be the vehicle for investors to make a profit.
So while AI itself my still reduce labor costs and open up huge margin for already existing companies, the individual companies producing AI will not have the same investment value if there is strong competition.
This is the real answer. AI may still be a game-changer, but if any mom & pop shop can do it now, all the expected future profit currently built into the stock price of Nvidia, et al. is suddenly very questionable.
I don’t think we are disagreeing. All I wanted to say was that this Deepseek phenomenon is not going to burst the LLM bubble. It is just going to challenge the monopoly of western AI firms.
Don’t confuse “bubbles” with “hype”. It will not burst the LLM hype but it could burst the speculation bubble of investments in AI companies.
TBH, most of investors are buying stocks not because they expect dividends, but because they plan to sell them later for more.
It’s the same thing. The value of any given stock has to do with the perceived future value of the stock. The perceived future value of the stock has to do with the ability of a company to profitably grow. No one invests in startups expecting dividends, but if the startup cannot demonstrate monopoly potential, it’s very difficult to get investment.
yes I think the demonstrative efficiency gains of the deepseek model put a big question mark behind nvidia’s valuation, as the main hardware supplier of the “AI revolution”
Makes me wonder how much collusion there was to make US AI as resource intensive as possible to (a) generate demand in chips, which is (i) related to the trade war involving Chinese chips and (ii) was intended to keep the US ahead of the game and (b) ensure a need for fossil fuels (i) in itself and (ii) to undermine China’s lead in green energy. There’s not just the stock price to consider but the geopolitical angle.
undoubtedly, I’m simply wondering whether this will trigger a wider economic crisis now or later
AI was always deeply unprofitable and there’s no moat for the companies that are trying to make it work.
I wrote some thoughts on this here https://lemmygrad.ml/post/6841053
I think the big question is whether people find new uses for all these Nvidia chips or not. Maybe crypto will flare up again or something new comes along. It does look like AI as a vehicle for chip demand is dead now though.
yes I saw and appreciated that analysis, I wondered whether the last 24 hours and/or markets opening have had an impact on your view of the impact on the wider economy in the short to medium term
Goldman is apparently warning about spillover as of 10 minutes ago on ft.com
We’ll have to wait a bit to see how this develops. There’s an absolute panic in the market right now, but we’ll see if people calm down in a few days. I think the key question is going to be around the demand for Nvidia chips going forward.
Would this mean cheap GPUs?
unless a new scam like NFTs comes along
Selling my jpegs of monkeys smoking weed and buying jpegs of monkeys snorting coke!
