Hey everyone, how’s it going? Today, I just wanted to share a quick thought. If you're panic selling Nvidia right now because of the recent market dip, I can’t thank you enough. You've given me an incredible opportunity to buy into a high-quality dividend compounder with a great future ahead.
So, here's the deal: Nvidia is down 17% day over day, which is crazy for a company like that. The stock has dropped to $118 a share, when just recently it was hovering around $147–$150. That’s a huge drop, so something’s clearly going on. And here’s the news: Over the weekend, China unveiled an AI model called DeepSeek, which is similar to OpenAI's ChatGPT. DeepSeek uses Nvidia’s more budget-friendly H100 GPU chips instead of the premium models Nvidia usually promotes, and that’s what’s got the market panicking.
People are starting to believe that if China can build an AI model like this using the cheaper chips, the demand for Nvidia’s high-end GPUs is going to vanish. But I want to slow down right there and break it down. First of all, let’s be real: DeepSeek comes from China. So, how much of this is actually true? China claimed they only spent $6 million to develop this AI alternative, which sounds pretty impressive, but can we really trust those numbers? Are they being honest about their costs?
Wall Street’s freaking out, thinking that DeepSeek will replace OpenAI and make AI chipmakers obsolete. But here’s my take: I think this is actually bad news for the tech companies trying to monetize AI with subscription models. Think about it: People who pay $200 a month for premium AI services will likely flock to DeepSeek to try it out, just like how people bounced between Netflix and Hulu when streaming services first exploded.
In the short term, I do think OpenAI might suffer. But long-term, I’m super bullish on companies like Google, Microsoft, and Tesla. These companies, who are already paying for premium OpenAI services, are now going to have cheaper access to AI tech, and that’s huge.
Now, here's my hot take: I believe the rest of the AI chip supply chain, including companies like Nvidia, AMD, and Lam Research, is going to thrive. The demand for chips isn’t going anywhere, and DeepSeek won’t change that narrative. The future is still bright for the big players in the AI chip industry.
Right now, the street's all like, "Oh no, the US is done, China’s going to take over,"
Now, let’s get back to my point about the AI chip demand. Think about American history. We’ve never been okay with being second place. You’ve probably heard about the Space Race, right? In the 60s and 70s, the US was in a race with Russia to get to space first. We pumped millions into rocket technology because we weren’t going to let Russia beat us.
Fast forward to today, it’s the US versus China in the AI race. Do you really think that American companies like Tesla, Microsoft, and Nvidia are just going to throw in the towel and say, "Okay, China beat us, we’ll just be number two"? No way. If anything, China’s move with DeepSeek is going to light a fire under the butts of US tech giants, pushing them to innovate even harder.
So, just like the Space Race, I see this leading to another round of breakthroughs in technology, and I’m betting that AI chip manufacturers—Nvidia, AMD, Lam Research, all of them—will do even better because of it. The idea that DeepSeek using cheaper chips will somehow lower demand for premium chips doesn’t add up. Look, just because the budget chips are being used doesn’t mean the premium ones will become obsolete. If anything, both kinds of chips will be in demand.
So do I think Nvidia is done? Absolutely not. When Nvidia reports its earnings in the next couple of weeks, the demand for its high-end chips is going to be more obvious than ever. Sure, China showed that AI can be done with budget chips, but that doesn’t mean the demand for the powerful ones is going anywhere. The chip market will continue to grow in both budget and premium sectors.
By the way, I actually made a prediction about Nvidia stock a while ago on my channel. I said I’d buy if it hit between $116 and $119 per share. Guess what? It dropped to $118 yesterday. So, I bought a ton at $118 and $119. I’m feeling good about it. If I’m wrong, I’ll be disappointed, but I have a strong feeling this is a solid buy.
But personally, I think this is a great opportunity for Nvidia. And don’t forget: China’s DeepSeek is still using Nvidia chips—not their own. So, in the end, Nvidia is still winning. The real losers will be the companies trying to monetize AI platforms.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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