7 ms·

The hit on NVidia's stock price makes no sense to me. DeepSeek uses H100s and H800s. They'll likely have reasons to buy more now, and America will want to comp

by m00x 2y ago

The hit on NVidia's stock price makes no sense to me. DeepSeek uses H100s and H800s. They'll likely have reasons to buy more now, and America will want to compete even harder, buying more chips. American companies are still way ahead as well, but they're just getting more competition. This will be healthy.

jijji 2y ago
It's probably the lack of understanding the market... Most people thought there was a ban (issued by the US in 2022) against China being able to utilize the H100 Nvidia graphics cards to prevent them from using AI (for the obvious purpose of oppressing their people). If anything, export controls need to be looked at and probably tightened as this is a glaring loop hole.
- thorncorona 2y ago
  Huawei has B200 competitive inference chips coming.
  - jijji 2y ago
    Nvidia has the Blackwell B200, its latest GPU card. Huawei's offering is called Ascend 910C. Huawei's future offering to compete against the Nvidia Blackwell B200 is called Ascend 920C.
- teleforce 2y ago
  > export controls need to be looked at and probably tightened as this is a glaring loop hole US is the prominent trade freedom proponent champion until it does not suits them Also US is the prominent democracy proponent champion until it does not suits them And also US is the free speech freedom champion until it does not suits them
  - jijji 2y ago
    I can understand your argument, but I also understand why the US would try to ban an oppressive regime who specifically use technology like AI for ubiquitous surveillance, behavior monitoring and social credit, facial recognition systems that can identify Uyghurs and alert authorities, internet monitoring (they arrest people every day for writing banned words on WeChat for example)... I think it's probably fine if they make the equipment themselves, but US probably shouldn't be supporting this type of activity.
    - amlib 2y ago
      Sorry for the whataboutism, but the US looks more and more hypocrite when they sell themselves as the paragons of democracy and free trade, ready to save the world from authoritarian China but are fine selling AI and AI hardware (and armament, but that's another matter...) to Israel's oppressive regime which clearly uses it to persecute and kill innocent Palestinians. It's all just dirty politics, in the end none of the people in power care if selling such technology feeds a monster or not, as long as they get their bags of money.
      - blackeyeblitzar 2y ago
        [flagged]
        computerthings 2y ago
        > surveys indicated that an overwhelming majority of residents of Gaza supported Hamas Come on, nearly half of the inhabitants of Gaza are/were under 18. "Surveys" cannot make collective punishment legal, or annexation and ethnic cleansing for that matter. I'd say outright cutting off a whole population from food and going on TV to rant about how even the babies are terrorists isn't self-defense or security. If anything it's with a second set religious extremists that needs Hamas just like Hamas needs them. And in similar fashion, they use "Israel" as a shield for what they want, despite the Israelis who do respect human rights and international law, and get threatened for it. > You’re trying to separate Hamas from everyday people in Gaza They are separate. Each person is responsible for their actions. You can't speak of democracy and then casually ignore this.
  - blackeyeblitzar 2y ago
    There are probably exceptional situations for each, but the US is far more for these things than against, to an extent that is unique and unprecedented. And that has improved lives and secured freedom not just for Americans but for many people around the world. Your negative take on the US isn’t convincing for me, as it is uncritical. Who champions free speech more, for example?
  - stickfigure 2y ago
    "US" is not a monolithic mind.
gleenn 2y ago
The stock price had assumptions baked in about the number of units expected to be sold. DeepSeek cut that hardware estimate by as much as 45x. That is that absolute obvious correlation between that model being very efficient to train and NVDA dropping 18%.
- stavros 2y ago
  Can someone explain how DeepSeek cut that estimate? Their (fast) API is always down, and the third-party providers on OpenRouter are more expensive than Claude.
  - juliuskiesian 2y ago
    They are currently under severe cyberattack from the US.
- sampullman 2y ago
  It still doesn't make sense to me. If the money for training is still there, wouldn't companies that can afford it use the efficiency gains and also scale up models? Unless AI is a bubble, and it pops, I can't see the demand for compute going down.
  - MichaelZuo 2y ago
    They would scale things up slightly slower. And money 5 years from now is simply worth less to markets than money 7 years from now.
  - EGreg 2y ago
    I think AI is a bubble. The amount of compute for inference is vastly overestimated, because a lot of caching is coming. It's driven by maniacal statements like Sam Altman's insistence that we must spend Trillions on compute, to achieve AGI, and it's more important than anything else. Project Stargate is some large fraction of that, and of course Softbank is no stranger to losing money on overestimating demand (for example, WeWork). To be fair, China has a lot of overestimation of demand too (for example Evergrande). The other is that rapid competition leads to overinvestment by all parties. https://www.wsj.com/tech/ai/sam-altman-seeks-trillions-of-dollars-to-reshape-business-of-chips-and-ai-89ab3db0 https://www.wsj.com/tech/ai/sam-altman-seeks-trillions-of-do...
mmaunder 2y ago
I think there was a growing awareness of NVidia's vulnerability and I think that, while I don't agree with his conclusions, Jeffrey Emanuel's excellent piece from the 25th added significantly to that momentum: https://youtubetranscriptoptimizer.com/blog/05_the_short_case_for_nvda https://youtubetranscriptoptimizer.com/blog/05_the_short_cas...
forgotoldacc 2y ago
Many stocks aren't grounded in reality. They're essentially Memecoins: Classic Edition™ now. Tesla barely even sells but the stock just won't go down. Boeing orders have fallen massively and they're posting massive losses each quarter, and management shows zero desire to improve the situation. But the stock has basically stabilized since the initial catastrophes.
- eru 2y ago
  Well, you can't have it both ways: Some people like to complain that the stock market is very short termist, and valuations never reflect what happens in the long term. And here you complain that the stock market doesn't focus solely on short term pain, but is looking to some potential futures.
  - IsTom 2y ago
    I wouldn't call Tesla's and especially Boeing's problems "short term".
    - eru 2y ago
      In that case, please feel free to short their stock, and make lots of money. If you are afraid of the potentially unlimited downside to a short, you can buy an out of the money call option as an insurance. Or instead of shorting directly and insuring that, you can also buy a put option, which gives you the right to sell the stock at a specific price.
deleted 2y ago
[deleted]
mlinsey 2y ago
People saw how much cheaper it was to train DeepSeek v3, and assumed this reduced NVidia's TAM. I think this doesn't make much sense. a) For inference, cheaper and faster compute will increase total inference spend, because the end-user products will work better and people will use them more. b) For training, the big labs will continue to spend because we have yet to see diminishing returns to scale - in fact, we have in the past year unlocked a new dimension to scale up training-time compute - doing more RL after pre-training to improve reasoning capabilities. Since current SOTA models are not yet smart enough for all the tasks people want to use them for, this means that any efficiency gains will be used to further improve performance. In the current competitive environment, even with DeepSeek's work, it's near-impossible to imagine OpenAI, Anthropic, Google, or Meta deciding to cut the compute budget for training their next model by an order of magnitude. They will still incorporate DeepSeek's techniques into their next model, but use them to squeeze even more performance out of the compute they have, and will keep purchasing as much compute as NVidia will sell them. Expect this trend to continue until there are no more returns to scale anymore.
- robomartin 2y ago
  It's even more fundamental than that. Any data center project currently under way or with plans to open within the next year or two has already place orders with NVidia or will do so very soon. Due to demand and lead times, you have to order to critical parts and systems today if you want to have half a chance of receiving them a year from now. Hardware supply lines are long and complex. I like to say that you cannot run a compiler and end-up with a warehouse full of chips. The next fundamental reality has to do with competition. Suppose company A foolishly decides to build a data center with only 10% of the chips they originally wanted based on the hype around DeepSeek. In the meantime, company B sticks to the plan and, perhaps, decide to take add the 90% of chips data center A did not take. The net result will be the company A will be absolutely destroyed by company B. They will have nearly twice the compute capacity, which will translate to a huge competitive advantage across many fronts. In other words, the selloff is, at best, ill informed. Market forces caused FUD. The smart one's took it as an absolutely massive buying opportunity. All you have to do now is wait.
ziofill 2y ago
Arbitrage opportunities :)
EVa5I7bHFq9mnYK 2y ago
The nvidia bubble went too far and was about to burst anyway. I started to buy puts a year ago. The DeepSeek was just a convenient catalyst.

by m00x 2y ago

jijji 2y ago

It's probably the lack of understanding the market... Most people thought there was a ban (issued by the US in 2022) against China being able to utilize the H100 Nvidia graphics cards to prevent them from using AI (for the obvious purpose of oppressing their people). If anything, export controls need to be looked at and probably tightened as this is a glaring loop hole.

thorncorona 2y ago
Huawei has B200 competitive inference chips coming.
- jijji 2y ago
  Nvidia has the Blackwell B200, its latest GPU card. Huawei's offering is called Ascend 910C. Huawei's future offering to compete against the Nvidia Blackwell B200 is called Ascend 920C.
teleforce 2y ago
> export controls need to be looked at and probably tightened as this is a glaring loop hole US is the prominent trade freedom proponent champion until it does not suits them Also US is the prominent democracy proponent champion until it does not suits them And also US is the free speech freedom champion until it does not suits them
- jijji 2y ago
  I can understand your argument, but I also understand why the US would try to ban an oppressive regime who specifically use technology like AI for ubiquitous surveillance, behavior monitoring and social credit, facial recognition systems that can identify Uyghurs and alert authorities, internet monitoring (they arrest people every day for writing banned words on WeChat for example)... I think it's probably fine if they make the equipment themselves, but US probably shouldn't be supporting this type of activity.
  - amlib 2y ago
    Sorry for the whataboutism, but the US looks more and more hypocrite when they sell themselves as the paragons of democracy and free trade, ready to save the world from authoritarian China but are fine selling AI and AI hardware (and armament, but that's another matter...) to Israel's oppressive regime which clearly uses it to persecute and kill innocent Palestinians. It's all just dirty politics, in the end none of the people in power care if selling such technology feeds a monster or not, as long as they get their bags of money.
    - blackeyeblitzar 2y ago
      [flagged]
      - computerthings 2y ago
        > surveys indicated that an overwhelming majority of residents of Gaza supported Hamas Come on, nearly half of the inhabitants of Gaza are/were under 18. "Surveys" cannot make collective punishment legal, or annexation and ethnic cleansing for that matter. I'd say outright cutting off a whole population from food and going on TV to rant about how even the babies are terrorists isn't self-defense or security. If anything it's with a second set religious extremists that needs Hamas just like Hamas needs them. And in similar fashion, they use "Israel" as a shield for what they want, despite the Israelis who do respect human rights and international law, and get threatened for it. > You’re trying to separate Hamas from everyday people in Gaza They are separate. Each person is responsible for their actions. You can't speak of democracy and then casually ignore this.
- blackeyeblitzar 2y ago
  There are probably exceptional situations for each, but the US is far more for these things than against, to an extent that is unique and unprecedented. And that has improved lives and secured freedom not just for Americans but for many people around the world. Your negative take on the US isn’t convincing for me, as it is uncritical. Who champions free speech more, for example?
- stickfigure 2y ago
  "US" is not a monolithic mind.

gleenn 2y ago

The stock price had assumptions baked in about the number of units expected to be sold. DeepSeek cut that hardware estimate by as much as 45x. That is that absolute obvious correlation between that model being very efficient to train and NVDA dropping 18%.

stavros 2y ago
Can someone explain how DeepSeek cut that estimate? Their (fast) API is always down, and the third-party providers on OpenRouter are more expensive than Claude.
- juliuskiesian 2y ago
  They are currently under severe cyberattack from the US.
sampullman 2y ago
It still doesn't make sense to me. If the money for training is still there, wouldn't companies that can afford it use the efficiency gains and also scale up models? Unless AI is a bubble, and it pops, I can't see the demand for compute going down.
- MichaelZuo 2y ago
  They would scale things up slightly slower. And money 5 years from now is simply worth less to markets than money 7 years from now.
- EGreg 2y ago
  I think AI is a bubble. The amount of compute for inference is vastly overestimated, because a lot of caching is coming. It's driven by maniacal statements like Sam Altman's insistence that we must spend Trillions on compute, to achieve AGI, and it's more important than anything else. Project Stargate is some large fraction of that, and of course Softbank is no stranger to losing money on overestimating demand (for example, WeWork). To be fair, China has a lot of overestimation of demand too (for example Evergrande). The other is that rapid competition leads to overinvestment by all parties. https://www.wsj.com/tech/ai/sam-altman-seeks-trillions-of-dollars-to-reshape-business-of-chips-and-ai-89ab3db0 https://www.wsj.com/tech/ai/sam-altman-seeks-trillions-of-do...

mmaunder 2y ago

I think there was a growing awareness of NVidia's vulnerability and I think that, while I don't agree with his conclusions, Jeffrey Emanuel's excellent piece from the 25th added significantly to that momentum: https://youtubetranscriptoptimizer.com/blog/05_the_short_case_for_nvda https://youtubetranscriptoptimizer.com/blog/05_the_short_cas...

forgotoldacc 2y ago

Many stocks aren't grounded in reality. They're essentially Memecoins: Classic Edition™ now. Tesla barely even sells but the stock just won't go down. Boeing orders have fallen massively and they're posting massive losses each quarter, and management shows zero desire to improve the situation. But the stock has basically stabilized since the initial catastrophes.

eru 2y ago
Well, you can't have it both ways: Some people like to complain that the stock market is very short termist, and valuations never reflect what happens in the long term. And here you complain that the stock market doesn't focus solely on short term pain, but is looking to some potential futures.
- IsTom 2y ago
  I wouldn't call Tesla's and especially Boeing's problems "short term".
  - eru 2y ago
    In that case, please feel free to short their stock, and make lots of money. If you are afraid of the potentially unlimited downside to a short, you can buy an out of the money call option as an insurance. Or instead of shorting directly and insuring that, you can also buy a put option, which gives you the right to sell the stock at a specific price.

deleted 2y ago

[deleted]

mlinsey 2y ago

People saw how much cheaper it was to train DeepSeek v3, and assumed this reduced NVidia's TAM. I think this doesn't make much sense. a) For inference, cheaper and faster compute will increase total inference spend, because the end-user products will work better and people will use them more. b) For training, the big labs will continue to spend because we have yet to see diminishing returns to scale - in fact, we have in the past year unlocked a new dimension to scale up training-time compute - doing more RL after pre-training to improve reasoning capabilities. Since current SOTA models are not yet smart enough for all the tasks people want to use them for, this means that any efficiency gains will be used to further improve performance. In the current competitive environment, even with DeepSeek's work, it's near-impossible to imagine OpenAI, Anthropic, Google, or Meta deciding to cut the compute budget for training their next model by an order of magnitude. They will still incorporate DeepSeek's techniques into their next model, but use them to squeeze even more performance out of the compute they have, and will keep purchasing as much compute as NVidia will sell them. Expect this trend to continue until there are no more returns to scale anymore.

robomartin 2y ago
It's even more fundamental than that. Any data center project currently under way or with plans to open within the next year or two has already place orders with NVidia or will do so very soon. Due to demand and lead times, you have to order to critical parts and systems today if you want to have half a chance of receiving them a year from now. Hardware supply lines are long and complex. I like to say that you cannot run a compiler and end-up with a warehouse full of chips. The next fundamental reality has to do with competition. Suppose company A foolishly decides to build a data center with only 10% of the chips they originally wanted based on the hype around DeepSeek. In the meantime, company B sticks to the plan and, perhaps, decide to take add the 90% of chips data center A did not take. The net result will be the company A will be absolutely destroyed by company B. They will have nearly twice the compute capacity, which will translate to a huge competitive advantage across many fronts. In other words, the selloff is, at best, ill informed. Market forces caused FUD. The smart one's took it as an absolutely massive buying opportunity. All you have to do now is wait.

ziofill 2y ago

Arbitrage opportunities :)

EVa5I7bHFq9mnYK 2y ago

The nvidia bubble went too far and was about to burst anyway. I started to buy puts a year ago. The DeepSeek was just a convenient catalyst.