From Out of the Loop:
this post was submitted on 27 Jan 2025
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Is the AI bubble collapsing yet?
Because it's high time - before the US commits billions to this nonsense for nothing.
Unfortunately, hundreds of billions have already been invested.
Not public money.
I don't give a shit if big tech monopolies lose their shirt on AI. But Trump wants to spend insane amounts of taxpayer's money on this shit. So if it should proves less expensive than it needs to be, now is the right time.
Billions have already been spent on building chip fabs which will never be profitable.
Yes, China is doing the US taxpayer a solid by giving them an opportunity to prevent losing money on AI, but I think this administration is going to find a way to send those billions to silicon valley anyway.
The chip fabs are not an issue, we will always need more chips
Fair point, though in our world of graying public/private distinction it's important to note that those companies spending hundreds of billions will want a return on their investment, whether that's voluntary or forcing the government to buy their shit at exorbitant prices.
Probably more of an AI-infrastructure-bubble collapse.
To use the old Gold Rush analogy—it’s like investors assumed the real money would be in selling pickaxes, but the miners just discovered they don’t actually need them.
I am enjoying this with every fiber of my being 🙏
I don’t understand why people are selling off. AI companies will just make bigger models, and then everything will be back to the same cost of compute again.
You're trying to understand the stock market? Lol
That’s the problem. It’s irrational and has always been.
People who don't understand tech (ie. investors) were led to believe the US had a decade headstart on AI and the GPU embargo would slow foreign competition.
Well, now here's deepseek, giving competitive results, developed on a fraction of the compute power. Gap closed. Now these same people will believe tech companies won't demand entire data centers of Nvidia B200s to compete.
Won’t the faster hardware be even better with more efficient models? I don’t see as much value loss as the market, especially since it’s already built.
Opportunity cost, why keep your money in company A that can give you 1.01 for each 1 invested, when company B is giving 1.011?
Yeah, but if anything, this should be good news for Nvidia. Better access to software is good for hardware companies. This is mostly bad news for software companies like OpenAI who got lots of catching up to do.
It's because it's a bubble. There's no tenable product that's worth anywhere near the amount of money that people are/were pumping into the stocks.
Now there's competition. So investors have to choose, who do they think is going to be more successful in the future? And that's a decision based on the predicted value of the actual product.
And if we're only talking about NVidia, they didn't have any competition until now. So of course their stock was going to tank.
DeepSeek isn’t a competitor to Nvidia. They’re not making better hardware. They’re just making better software, and more accessible. Better access to software is only good for hardware companies.
And this doesn’t change the future outlook of AI. More efficient AI software just improves that outlook. Now there’s suddenly a great new potential for improved AI models.
This is bad news for OpenAI, who relies on their exclusive access to the GPT models. Good news for Nvidia, because now they’re going to sell hardware to anyone who want to take OpenAI’s throne.
I don't get it either. If this makes it easier for smaller companies to run their OWN offline as well as computer hobbyists, etc....won't it just mean more demand from all the individuals/companies vying to buy hardware to run it?
If I was a large company I sure as fuck would not be using some of the things like Copilot, etc. and sending all my data to a possible competitor. I'd be putting up a bit of cash and figuring out how to use models offline.
The reasoning is that people will stop buying their most expensive hardware offerings. This doesn’t make much sense either. Someone will come up with something clever to do with all that new compute, and then the demand for expensive hardware will be back again.
I understand why this is terrible news for OpenAI. Their entire competitive edge was that they’ve invested billions to build their GPT models. Anyone who wants to get to their levels must do the same investments.
If what’s being said about DeepSeek is true, then their entire competitive edge has just vanished overnight. Billion dollar investment: gone. It’s going to be hard for them to make the return they hoped to make from their investment.
Nvidia hasn’t lost their competitive edge. They’re still making the best hardware for AI computing. The demand for AI compute is likely going to increase.
It’s also embarrassing for OpenAI. How could they have missed this?
Agreed, I would think that hardware might still be turned to other uses like protein folding, and mining, possibly?
Personally, I think the "market" is usually filled with lots of hysterics pushing it both up and down and this is possibly just another example. I picture these stock guys as a precursor to all the dipshit Youtube "techfluencer" types (sidebar: sigh, what the hell has happened to my industry? Many of these people seem like they are one step away from video feeds moms unboxing useless cheap junk, but instead, it's with the latest programming language or frontend Javascript framework. Apparently these types have lots of clueless followers thinking this is how to guide their careers in IT? WTAF. ) always with the hot takes and the clickbait thumbnails. Oh, and now these two groups work hand-in-glove - you can find stockbro YT hot takes all over the place reacting to DeepSeek, too. :)
i know absolutely nothing about investing. so this is a lay take:
before today i would invest in these ai big tech companies because ai is the next big thing, and there's no other real competition around and any coming up might be ready in 3 or 4 years maybe.
after today's news, why would i waste my money investing in companies that are building wasteful, energy consuming, and most importantly proprietary components when there's a new generative ai that is just as good, if not better, than what's available now, that runs on far cheaper components that is totally open sourced? i'm better off taking that money i was going to use to invest in big tech and putting it towards hiring some programmers to take the completely open sourced ai and modifying it to better suit my specific needs.
From what I've read, bigger models don't necessarily mean better results - at least not past a certain point.
Just wait for the government to ban this AI so they can continue to inflate their own AI bubble and cashout before it pops.
That's all good and fun, but investors are global. If rich American investors are getting f***** by the White House, they're going to send their money abroad.
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Does the new AI not run on their hardware?
The Nvidia stock is based on expected demand. The idea is they are the top dog when it comes to Ai compute. So as the world ramps up in putting shitty Ai in everything we can, the future demand on Nvidia stuff goes up and up. No serious competition is expected, so people are buying stock in expectation of huge profits in the future. So for a brief time right before the resource hungry shitty Ai destroys the planet, a lot of rich people will become even richer than before.
However this new Ai has shown you can make a just as shitty Ai, but using a lot less compute. This not only lowers the demand for Nvidia products, because less compute is needed. It also boosts supply because less capable competitor hardware might be in the running after all.
The stock market is pretty dumb, so instead of being fully dependent on supply and demand, it's also heavily based on expected supply and demand, which in turn are based on promises and hype. And because it's become so easy to trade these days, it can get very volatile because there are traders that just jump on any hype train and sell at the first sign of trouble. These amplify stock movements a lot. This has lead to the dot com bubble in overdrive, a lot of stock is so hyper inflated it isn't connected to reality anymore. See for example Tesla stock or in this case Nvidia.
So yeah basically late stage capitalism at work.
It does, they just used wayyy fewer resources compared to the likes of openAI/meta etc.
Oh no. Anyway...
Do investors think DeepSeek is powering their AI with magic? They are using NVIDIA chips.
Well that means we have to outlaw nvidia, obviously!
I’m not sure if Nvidia’s investors are accounting for Jevons paradox.
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