For those of us NOT enjoying our day in the stockmarket, please play this:
We play Shake It Off when we lose a point, a game, a set… or do something really stupid in tennis.
This is Nvidia yesterday and today. Today it’s down a whopping 18%:
Points I have learned since I wrote Part One earlier today.
+ From PC Mag:
“Why has Nvidia’s stock price tumbled, even though DeepSeek is still using its (Nvidia’s) chips? Because its AI model does more with less.
“US tech companies are now coming under fire for a potentially bloated approach to AI development, requiring more and more chips, while being less efficient with them than DeepSeek appears to be.”
In short, DeepSeek is a high performing AI engine for an ultra-low price.
You can down download its code and use it for free (that’s called open source).
But it comes from China.
Do you want Chinese software touching your company’s financials?
DeepSeek, like TikTok, is obliged to share all its data with the Chinese government.
I have become increasingly impressed (?) with the Chinese government’s surveillance, intrusion and data sabotage abilities.
This is not the world of December 2001 when we invited China in and they joined the World Trade Organization (the WTO).
This is the world of President XI, a paranoid nutcase.
I have an “inviolate” 15% rule. When the stock falls 15%, I dump it.
I can’t make that decision right now.
I don’t understand enough.
I think this panic may be overblown.
I pray this is overblown.
Meantime, I note that several of my stocks — Apple, Meta, Berkshire Hathaway, Eli Lilly and Costco are actually up today.
Apple is up, despite the fact that a few days ago, I assessed its immediate future as dismal.
I am such a brilliant analyst.
Despite today’s crash, I’m still up 70% on Nvidia.
I played tennis well this morning.
I will sleep well this evening.
Part One, earlier today
China has DeepSeek. It’s better and cheaper to make. It’s also open source and free, for now.
Hence it will kill the market for Nvidia chips.
Nvidia’s stock will fall through the floor today, maybe 14%. So will all its customers – Google, Microsoft, Meta – the erstwhile Magnificent Seven.
Panic is Wall Street’s middle name.
Today will be Mega Panic.
But…
AI’s endearing long-term advantages are not going away because someone in China has figured a way to do AI cheaper.
Hello. That’s been the name of the game in computing since Intel introduced the first microprocessor in 1971 with 2,300 transistors.
Nvidia’s latest Blackwell chip has 208 billion.
This week’s Economist has a big piece:
Uncomfortably close
Why Chinese AI has stunned the world
DeepSeek’s models are much cheaper and almost as good as American rivals
You can read it here:
I’ll post more today. I did. It’s above. — Harry Newton
