Black swan and US scholarship crash?

Boom. Deepseek, Chinese AI scares Chagpt and dropped Nvidia. Should we be afraid of a collapse of the values ​​that invest massively in AI and therefore a crash of the stock market?

Deepseek was released 6 days ago and this weekend, social networks made it a Nvidia Killer.

Everything must be still tested, but China has just hit a big blow. But like anything that comes from China, can we believe it?

Answer

Deepseek is better than chapgpt of open ai and terribly cheaper

On a lot of materials, Deepseek is better than existing generatives

The worst? Deepseek would have only asked for $ 6 million to be developed. While Microsoft, Apple, Google, Facebook Meta, X and others are spending tens of billions each year for the next few years.

What if the 7 magnificent spent too much money to buy in particular too much GPU when the next changes of AI will be less expensive because it is less greedy?

Does all this jeopardize Nvidia’s business?

The cost of Deepseek would be ridiculous. 97% less than Open

Everything goes very quickly on the AI ​​so the drop in costs is normal. But there, Deepseek throws a pavement in the fed up.

Deepseek would only be an annex project that requested few means and in particular few graphics cards from Nvidia under embargo since.

But as by chance, since this embargo, Nvidia sells much more cards in Singapore. Which are undoubtedly exported to China.

Will Deepseek kill Nvidia or China?

• First, Deepseek is at a test version. It’s open source. And we understand the aim of allowing to put sticks in the wheels of the American dominance of the subject. Many AIs will be able to be developed at a lower cost on this basis and trained with other bases than those Chinese who give politically correct answers currently when they are questioned about the Chinese party.

• Then concerning the cost. It’s a safe bet, that it is deliberately hidden, or extrapolated as usual for the Chinese.

Because if they announce the real cost and in particular the number of Nvidia GPU cards acquired, it will become obvious that China bypassing the ban on the US. Even if it’s a secret for anyone.

• The current version of Deepseek is only based on text. It is therefore less greedy in resources. Their video version and upcoming images will necessarily be more greedy in calculations and therefore GPU card needs. It is therefore necessary to take this into account in the announcement of costs so seen as low.

All this is therefore not terrible for Nvidia. Because in the future the AI ​​will become less greedy in hardware. But it’s not the end of the world either. Because an open source project, will also boost the number of generative AIs which will be launched because the barriers at the entrance are reduced.

China has a lot of reasons to throw Deepseek, to make us dream by arranging with reality.

We absolutely cannot doubt that China pays influencers and journalists to publish articles which demonstrates the technical superiority of China.

Recently I saw an article on a process to make iron more efficiently. 3,600 times better. Except that the technique used has been known for years by the West. And the world leader that is Arcelor with others had stopped interested in it because the process was not replicable on a large scale. And several years later, now China announces the thing in our media as if it were new …

We had this with the replica of the Chinese A320 too. Even by copying, it was complicated to take it out.

And typically we will find that in many areas where China communicates on a technical advance which is often not real, exaggerated or embellished or simply not replicable on a large scale. It is likely that on this AI we are close to that too.

The goal is to make believe that China is fine, is technically advanced and is able to do all of this despite American regulations. The reality is that like the Russians, they go through diverted means. The aim is to attract foreign capital too and to serve their propaganda vis -à -vis their population while giving birth to a more positive feeling about them in the eyes of Western populations.

But it doesn’t matter whether China lies or not about Deepseek.

The genetive AI honestly, everyone knows that it was only a matter of time to achieve what it becomes a convenience. The added value of the AI ​​is not there.

It is in software more than hardware. Nor is it in these language models.

So yes, NVIDIA in the long term anyway, everyone knows that with massive investments, we have an exacerbated request in a short time but which will be as much future overcapacity. Running necessarily at a time of cost reduction, reduction of demand, and therefore reduction of orders while absorbing the existing inventory.

Whether for a GPU or another product, the business cycle works in the same way for everyone. It’s just a matter of time.

So Deepseek is not going to kill Nvidia, this is only a step towards the fact that in the future, the more we invest in AI is less it will be expensive to implement, the less it will be greedy in hardware, GPU and energy.

But in the meantime, the open source, can make it possible to boost demand because new entrants can start.

So the market will undoubtedly be afraid in the short term because it changes its certainties a little. But in the end, we are on a classic business cycle.

It can be the future but the river will not be quiet with air holes to wait due to the volatility of demand.

There is always a time when there is an overcapacity due to extrapolated and too strong expectations of operators and investors. An air hole as a return to reality and then a return to normal in a more linear and less exponential cycle.

The AI ​​will continue to evolve. It’s a sprint far from finished

Deepseek is talking today but already Gemini 2.0 of Google who must come out soon plans to be more efficient than Deepseek R1 which as by magic will not be the latest version for a project which is announced to us as a hobby of the leader

If that is really the case. So the US will soon come to break out these Chinese who probably dream of coming to have a stay at Silicon Valley with a nice check and less pressure from their political regime.

So let’s keep our precautions towards Deepseek and our reserve on what is communicated.

Look at the disruption that SpaceX has made on satellite launches. Look at the drop in launch prices.

It is capitalism. Especially with such investments, one can expect from AI, only one thing, which it improves and is less and less expensive to produce and energy.

At the end. The only question to ask is

Can the Chinese really beat the US in the AI ​​race?

Above all, AI stops at these only language models. No. If Microsoft spends $ 80 billion a year, it is good that the generative AI is only the emerged part of the iceberg which is clearly not the most profitable or the most major as the final objective in this frantic race that the giants of the net are launching.

And as long as these US and Chinese giants are fighting in this race, this will only strengthen the dominant position of Nvidia and other actors linked to the entire value chain.

But ultimately yes, there will be an air hole. There will be a lesser request that will eventually arrive, more competition that will reduce the margins, a production at a lower cost. And the winner will be the one who has a real moat and who is able to keep it. This is what is played out.

The fact that hardware the added value of the AI ​​will be found mainly in the software. And that hardware will experience overcapacity.

As always and for everything.

Dynamic graphseo graphseo portfolio

I continue to surf the Chinese who benefit from Trump’s slightest pressure. For the moment it is happening according to what I had exposed to you;

I am very pro software and biotech which are in my opinion the values ​​where investors should see the most added value of AI; Hardware as we have just seen, the investor can start asking questions about the future and taking advantage surely.

I think you should not drop green values. Help would be that the Fed further drops its rates soon.

I explained to you anyway My investment ideas 2025.

friendly

Julien