Did Silicon Valley get blindsided by this?
The speed of how fast things are changing in the world is just crazy.
Did Silicon Valley get blindsided by this?
The speed of how fast things are changing in the world is just crazy.
Thanks. I just turned on CBBC (Squawkbox) and that’s the lead story
Edit: added: Nvidia down 12.3% at the moment.
They reckon energy stocks will be hit as well
Bang bang bang
What are your thoughts on deepseek? I hear they are so efficient they are 90% cheaper than chat gpt. Does that mean big tech is wasting money on their data centers?
Chat gpt generating 3b rev rn. Tech is expected to spend 500b with stargate in 5 years on infrastructure. These gpu data centers have a life of 4 years. Don’t know how they’d get an roi. It sounds like they are just wasting money. Is stargate a capital raise that dilute chat GPT owners? Or simply capex spend on infrastructure to be paid by chatgpt revenues?
I honestly have no idea.
What we’re seeing here is imo the epitome of why economic analysis is such a pseudo science that works until it doesn’t. And usually it is useless when you actually need it, such as in structural shifts in the market environment.
It’s honestly mindboggling that the news are now flooded with analysts and experts trying to predict what comes next. But these same dudes were completely blindsided by DeepSeek. The tech giants were supposed to have a 4-5 year lead on AI due to better chips and what not. That was just wrong. For once I’d like the media to question the value add (and the lack thereof) of economic analysis.
What were the numbers? Stargate was going to be $500B and DeepSeek can do the same thing for what $6M? $60M? And using cheaper chips
Something like that: DeepSeek can achieve the same processing power with 1/100th of investment and sub premium chips.
thanks
lol so the story is we banned the Chinese from super strong Nvidia processors. But they were able to innovate using less inferior Nvidia processors that are 90% cheaper.
So Nvidia tanked because planned capex spending was 500b and maybe big tech does not need to spend that. But last I checked both use Nvidia, and they can set the price because they have a monopoly.
Big tech also tanked cuz they already spent a lot in the past. Inconsequential though, they generate fcf like a madman and their capex is a subset of it.
That being said return on these data centers is pure garbage. These processors have a 4 year life. Unless ai revenues continue to grow really really fast. Or they are diluting ai companies.
That being said, what is the true valuation of ai companies. Many seem to be leap frogged fairly easily with very little investment. So there is no moat.
In summary if ai revenues can grow fast then there is no issue on capex spend. But very likely it won’t. Many are spending in ai to remain competitive so perhaps roi is not the focus.