The open source DeepSeek AI model has been built my the Chinese for a few million dollars, and it seems this model works better than the multi-billion dollar paid version of Chat GPT (at about 1/20th the operating cost). If you watch the news hype, it’s all about how Nvidia and other tech companies have taken a huge financial hit as investors realize that they don’t ‘need’ the massive computing power they thought they did. However, to put this ‘massive hit’ into perspective let’s look at the biggest stock market loser yesterday, Nvidia.
Nvidia has lost 13.5% in the last month, most of which was lost yesterday.
However, if you zoom out and look at Nvidia’s stock price for the last year, they are still up 89.58%!
That’s right, this ‘devastating loss’ is actually a blip when you consider how much the stock has gone up in the last year, even when you include yesterday’s price ‘dive’. If you bought $1,000 of Nvidia stock a year ago, that stock would be worth $1,895.80 today.
Beyond that, the hype is that Nvidia won’t get the big orders they thought they would get, if an open source LLM (Large Language Model) is going to make efficient, affordable access to very intelligent AI, without the need for excessive computing power. But this market is so new, and there is so much growth potential. The cost of the technology is going down and luckily for Nvidia, they produce such superior chips that even if there is a slow down in demand, the demand will still be higher than their supply will allow.
I’m excited to try DeepSeek (I’ve tried signing up a few times but can’t get access yet). I’m excited that an open source model is doing so well, and want to see how it performs. I believe the hype that this model is both very good and affordable. But I don’t believe the hype that this is some sort of game-changing wake up call for the industry.
We are still moving towards AGI, Artificial General Intelligence, and ASI – Super Intelligence. Computing power will still be in high demand. Every robot being built now, and for decades to come, will need high powered chips to operate. DeepSeek has provided an opportunity for a small market correction but it’s not an innovation that will upturn the industry. This ‘devastating’ stock price losses the media is talking about is going to be an almost unnoticeable blip in stock prices when you look at the tech stock prices a year or 5 years from now.
It is easy to get lost in the hype, but zoom out and there will be hundreds of both little and big innovations that will cause fluctuations in stock market prices. This isn’t some major market correction. It’s not the downfall of companies like Nvidia and Open AI. Instead, it’s a blip in a fast-moving field that will see some amazing, and exciting, technological advances in the years to come… and that’s not just hype.
