this post was submitted on 31 Jan 2025
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I get the stupid basic excuse about big tech purchasing loads of silicon. That reasoning seems deeply flawed and idiotic to me. If Deepseek R1 democratizes training more for less, then that means customers with mid to small size data centers like universities now have access to train and research models in this space. Nvidia does not have a real competitor, so they get the sale. Their potential customer base just grew exponentially right? OpenAI should be devalued massively by this change, but I don't see why anything impacts Nvidia negatively in this instance. Am I missing something or is the market this level of stupid? (I have no skin in this game)

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[โ€“] typicalproducts@lemmy.world 3 points 1 day ago* (last edited 1 day ago) (1 children)

I disagree with other commentors that the market is irrational. It appears irrational in relation to the news because, contrary to what we are told, news doesn't move markets, money moves markets (though, yes, some salient times news is what causes the money to move). Many times big news does nothing, and equally many times major movements occur with no news to speak of.

The cause for big money movements into Nvidia seem pretty clear: this past year Nvida has become well known as an foundational buisness for the fastest growing new sector of artificial intelligence. As such, like amazon before it, it has become big enough to swallow it's competitors, which makes it a good long position for investment. So, with good foundations and the lions share of the AI market, when the big investments drive up the price it is easy to get the financial news to drum up retail interest and explain why it is a good place for the average person to put their money, all of which drives the price up further.

It seems to me more likely that this was a semi- (maybe only algorithmically) coordinated dump: it does not make a lot of sense to me that deepseek's model would cause doubt in Nvidia's valuation, as efficient models which briefly beat the leaders seem to pop up from time to time without the same armaggedon and retail investors are generally not keeping up with the bleeding edge of AI developments. Indeed, before the massive sell-off, AI news youtube videos on deepseek were not even particularly well watched.

We are taught that the market reacts to news but, especially with dumps, its seems to me that more often news stories are cooked up as a cover for market movement (see, for instance, the way companies will send news briefs to cnbc to have them help pump and dump stocks).

Maybe it was deekseek, or maybe it was Trump planning to tariff TSMC in Taiwan, or simply that the algorithms decided it was time for a little rug pull on retail.

Whether the whales planed to sell together or the algorithms did I guess is not so important, though it is interesting that CNBC's reporting mentioned that only a week ago big tech investors were discussing deepseek at davos.

Market movements are only out of the ordinary if the big investors lose out. Nvidia, I think (and hope -- because I'm invested), will remain a good long monopolistic stock like amazon, which will continue to have its cycle of good news pumps and bad news dumps as the big players prey on the fomo retail traders.

[โ€“] j4k3@lemmy.world 1 points 1 day ago* (last edited 1 day ago)

I expect Nvidia to boom for at least another 5 years.