What I expect will happen with Nvidia stock in next 6 months
1. US companies such as OpenAI, Anthropic, Google are all smearing DeepSeek in the media. They're saying how DeepSeek trained on OpenAI's outputs illegally. This is just lobbying for what's to come.
2. Trump administration will be in full force to protect AI companies in the US. Sam Altman is now buddies with Trump after giving him credit for Stargate announcement. Elon owns xAI.
3. Expect the US government to sanction Deepseek. This will prevent American companies such as Microsoft or Huggingface from hosting DeepSeek models.
4. Expect the US government to curtail Nvidia chips even more in China. Perhaps they'll do a full Nvidia ban. Perhaps they will restrict shipments to Singapore, where GPUs are then funneled into China.
5. Expect Chinese companies to put in huge orders for Nvidia chips right now. They're not stupid. They know it's coming. Q2 should be a blowout quarter for Nvidia because of a huge influx of Chinese orders before an even bigger ban on Nvidia exports.
6. Expect the ban to happen at the end of Q2 sometime.
7. Expect Nvidia stock to recover first when they announce earnings. Investors will see a huge future orders from American companies (Jevons Paradox) and huge sales in China (before the ban).
8. Expect stocks to sink a bit after the announcement of the ban.
Deepseek's advancements are not going away, even if you ban them. Demand for NVDA chips will go down, and likely will take a long time before Jevon's Paradox kicks in.
>Demand for NVDA chips will go down, and likely will take a long time before Jevon's Paradox kicks in. reply
I expect Jevons Paradox effect to start immediately. Small businesses and enterprises are likely wanting to order DGX systems for internal inference. OpenAI and larger AI labs will want to put a bigger distance between themselves and Chinese AI models by using compute muscle and advantage. All AI labs see the same efficiency benefit so they will have to continue to compete on compute capacity.
Last week the moat was the large size or cost to generate a model. That has gone away. So there should be lots of competition now within the US from smaller companies.
New AI Lab: Trains a model using Deepseek's techniques on 2,000 GPUs
xAI/OpenAI/Anthropic/Google: Trains a model using Deepseek's techniques on 100,000 GPUs
I fail to see how this makes smaller companies competitive.
Depends on whether smaller companies can deliver sufficient results cheaper than the larger ones. There are some indications that suggest that there are diminishing returns on investing on ever more power.
It's like you don't need a 1000HP supercar to get around town, a 55HP sedan is fine for most folks.
Yep, that is my point. If the large scale LLMs are not sufficiently better than the new crop of startups, I suspect the large firms will need to acquire the startups (that would be their response due to a lack of a moat). Its hard to buy everything and to know where to place your bets.