The immediate market reaction

The immediate market reaction appears to be driven by heightened risk aversion, with futures plummeting sharply. We’ll need to monitor whether this volatility subsides and stability returns. While Deepseek has been in existence for some time, it only recently entered my awareness over the weekend, suggesting its broader market impact may now be coming into focus.

Will Chinese DeepSeek Disrupt Nvidia?

MSFT & META Earnings Divergence: Any Post Earnings Plan?

Meta Platforms reported strong fourth quarter earnings. EPS up annually by 50% to $8.02, compared to Wall Street's consensus estimate of $6.76. However, revenue outlook missed estimates. Microsoft reported slower-than-expected growth in its crucial Azure cloud business on Wednesday despite beating estimates for overall quarterly revenue, sending its shares down 5% in extended trading. -------- Is Microsoft a buy after the earnings dip? How do you view their capex? Is Meta's guidance miss a warning sign?

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EPS up annually by 50% to $8.02, compared to Wall Street's consensus estimate of $6.76. However, revenue outlook missed estimates.\nMicrosoft reported slower-than-expected growth in its crucial Azure cloud business on Wednesday despite beating estimates for overall quarterly revenue, sending its shares down 5% in extended trading.\n--------\nIs Microsoft a buy after the earnings dip?\nHow do you view their capex?\nIs Meta's guidance miss a warning sign?","image":"https://community-static.tradeup.com/news/fa0ba528303948b04bb99df4ca10f42f"}],"images":[],"coverImages":[],"html":"<html><head></head><body><p>The immediate market reaction appears to be driven by heightened risk aversion, with futures plummeting sharply. We’ll need to monitor whether this volatility subsides and stability returns. While Deepseek has been in existence for some time, it only recently entered my awareness over the weekend, suggesting its broader market impact may now be coming into focus.</p></body></html>","htmlText":"<html><head></head><body><p>The immediate market reaction appears to be driven by heightened risk aversion, with futures plummeting sharply. We’ll need to monitor whether this volatility subsides and stability returns. While Deepseek has been in existence for some time, it only recently entered my awareness over the weekend, suggesting its broader market impact may now be coming into focus.</p></body></html>","text":"The immediate market reaction appears to be driven by heightened risk aversion, with futures plummeting sharply. We’ll need to monitor whether this volatility subsides and stability returns. While Deepseek has been in existence for some time, it only recently entered my awareness over the weekend, suggesting its broader market impact may now be coming into focus.","highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/396980351357376","repostId":1153606736,"repostType":2,"repost":{"id":"1153606736","kind":"news","pubTimestamp":1737864000,"share":"https://www.laohu8.com/m/news/1153606736?lang=&edition=full","pubTime":"2025-01-26 12:00","market":"us","language":"en","title":"Will Chinese DeepSeek Disrupt Nvidia?","url":"https://stock-news.laohu8.com/highlight/detail?id=1153606736","media":"Forexlive","summary":"The stock price of NVDA stock is probably the best guide to this answer.","content":"<html><head></head><body><h2 id=\"id_2139294474\" style=\"text-align: start;\">Will Chinese DeepSeek Disrupt NVIDIA and the American AI Industry?</h2><p style=\"text-align: start;\">The global AI race has taken an intriguing turn with the emergence of China&#39;s DeepSeek, touted by some as a potential disruptor to NVIDIA&#39;s dominance in the AI hardware space. As speculation swirls, stock investors, analysts, and thought leaders are left grappling with the critical question: Is DeepSeek a genuine threat to NVIDIA and the broader American AI industry, or is this a case of overhyped news amplified by interested parties?</p><p style=\"text-align: start;\">The news that DeepSeek&#39;s model surpassed OpenAI&#39;s o1 in specific reasoning tests has sparked intense debate within the AI community. This development has significant implications for the AI market, potentially impacting the stock prices of companies like NVIDIA and other AI-related companies.</p><p>I’ll preface this by saying that I am not a renowned expert in deep technology or AI hardware. I don’t claim to have a definitive answer. Instead, I propose a method to find the answer—not by theorizing endlessly but by observing how the stock market reacts. The stock market, with its collective wisdom and ability to process information, often acts as the closest thing we have to a truth detector.</p><p style=\"text-align: start;\">Let’s explore the context, evaluate the key factors at play, and develop a logical framework to assess the significance of DeepSeek’s emergence.</p><h2 id=\"id_3124687145\" style=\"text-align: start;\">The Landscape: NVIDIA’s Moat vs. DeepSeek’s Promise</h2><p style=\"text-align: start;\">NVIDIA has long been the undisputed leader in AI hardware, leveraging its GPUs and CUDA software ecosystem to dominate the market. Its ecosystem is sticky—developers, hyperscalers, and enterprise clients are deeply entrenched in its platform, creating significant switching costs. This is not unlike Apple’s ecosystem, where loyal users and interconnected services create barriers to exit.</p><p style=\"text-align: start;\">DeepSeek, on the other hand, reportedly offers a more cost-efficient AI solution. The analogy some have drawn is that DeepSeek could be the “cheaper smartphone” to NVIDIA’s “iPhone.” In the smartphone industry, the availability of cheaper alternatives has undeniably shifted market share, particularly in emerging markets. But did this disrupt Apple’s stock price or its dominance among its loyal user base? Not significantly. The same could apply to NVIDIA, depending on whether DeepSeek can replicate NVIDIA’s ecosystem or merely compete on price and performance.</p><h2 id=\"id_2754502625\" style=\"text-align: start;\">The Role of Market Reactions: Finding the Answer in the Price</h2><p style=\"text-align: start;\">Here’s where the stock market comes in. Instead of relying solely on speculative opinions, <strong>I suggest that the best way to gauge the impact of DeepSeek is to observe NVIDIA’s stock price</strong>. The stock market is often a better truth-teller than any single analysis. It reflects collective sentiment, informed by analysts, insiders, and countless external factors.</p><h3 id=\"id_716272745\" style=\"text-align: start;\">What to Watch:</h3><ol start=\"1\" style=\"list-style-type: decimal;\"><li><p><strong>The Reaction to the News</strong><br/>Since the DeepSeek news broke, NVIDIA’s stock has not shown any drastic reaction. It actually rose apx 2.5% after the news came out, if we look at NVDA stock price from the next day it traded, to the close of the week. <strong>This lack of significant movement, not to mention lack of stock price decline (crash...?) -- suggests that the market does not yet see DeepSeek as a significant disruptor</strong>. If it were, we would expect a sharp and sustained price decline. Who remembers other cases, such as Facebook’s Cambridge Analytica scandal a few years ago and the immediate FB stock decline?</p></li><li><p><strong>Earnings as a Catalyst</strong><br/>NVIDIA’s upcoming earnings report will be pivotal. Pay close attention to management’s commentary, particularly regarding competitive risks in the AI space. If DeepSeek is a genuine threat, it could show up in NVIDIA’s guidance or performance, especially in its data center segment. <strong>I propose observing NVIDIA’s stock price from the time the news broke until two weeks after earnings</strong>. This period should provide enough data to assess whether DeepSeek is having a tangible impact, even if will not be talked about. <strong>The price knows, and it almost always knows better than you, or anyone else</strong>.</p></li></ol><h2 id=\"id_2278388754\" style=\"text-align: start;\">Interpreting the Price Action Post Upcoming Nvidia Earnings (Scheduled for 26 Feb 2025): What It Might Tell Us</h2><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/b0a9b5f3ee48430da66d764f7f07053f\" title=\"NVDA stock price is your best guide to the &#34;truth&#34;\" tg-width=\"1920\" tg-height=\"1634\"/><span>NVDA stock price is your best guide to the &#34;truth&#34;</span></p><h3 id=\"id_1345298125\" style=\"text-align: start;\">Scenario 1 for the Upcoming Nvidia Earnings Report: Stock Rises or Remains Stable</h3><p style=\"text-align: start;\">If NVIDIA’s stock rises or stays within its current range, the market is likely signaling that DeepSeek is not a major disruptor. Perhaps NVIDIA’s ecosystem is too entrenched, or DeepSeek’s solution doesn’t offer enough differentiation. It’s also possible that other factors, such as AI demand growth or NVIDIA’s new Blackwell chips, outweigh any competitive threats.</p><h3 id=\"id_1542877096\" style=\"text-align: start;\">Scenario 2 for the Upcoming Nvidia Earnings Report: Stock Declines</h3><p style=\"text-align: start;\">If NVIDIA’s stock declines, the reasons warrant closer examination. Is the drop due to bottlenecks in Blackwell chip deliveries, macroeconomic pressures, or broader market trends? Or does it reflect legitimate concerns about DeepSeek? Analysts will need to scrutinize earnings commentary, data center revenue trends, and any shifts in market share. It’s critical to avoid jumping to conclusions without understanding the underlying reasons for the decline.</p><h2 id=\"id_3331170201\" style=\"text-align: start;\">The Unknowns: Factors and Their Weights</h2><p style=\"text-align: start;\">One of the challenges in analyzing stock movements is that <strong>we can never know all the factors affecting a stock price, nor the relative weights of those factors</strong>. We might think we know, we may hear great explanations, but we don&#39;t exacly know. Earnings reports often illustrate this: a company might beat revenue and EPS estimates, yet the stock declines. Analysts scramble to explain why—was it slower sales growth, weaker guidance, or some other reason? The reality is that the stock market processes countless variables simultaneously, and not all of them are visible to us. The granular variables and their weights will never be known to us. But price knows.</p><p style=\"text-align: start;\">The same principle applies here. Even if NVIDIA’s stock remains stable, it’s possible that DeepSeek is a growing threat but not yet significant enough to outweigh other factors. Conversely, if the stock declines, DeepSeek may not be the primary cause. This complexity is why I emphasize looking at the stock price holistically and over time, rather than rushing to judgment based on short-term moves.</p><h2 id=\"id_3858120432\" style=\"text-align: start;\">Seeking the Deep Behind DeepSeek: Trust the Price, Not the News</h2><p style=\"text-align: start;\">DeepSeek’s potential to disrupt NVIDIA and the American AI industry is an open question, but the best way to find an answer is to let the stock market speak. Watch NVIDIA’s price action from the time the news broke until two weeks after its upcoming earnings. If the stock remains stable or rises, it’s likely that DeepSeek is not a significant threat. If it declines, dig deeper into the reasons—whether they’re related to DeepSeek or other factors.</p><p style=\"text-align: start;\">While price action can act as a “truth detector,” it’s not infallible. The market may not immediately price in all information, and short-term movements can be influenced by noise, speculation, or interested parties (e.g., short sellers amplifying fears about DeepSeek). As always, exercise caution and remain open to multiple interpretations. <strong>But do follow the price more than anyone&#39;s opinion, especially yours</strong>.</p><p style=\"text-align: start;\">Ultimately, the price knows. Follow the money. Follow the price and you shall be closer to finding the truth.</p><p style=\"text-align: start;\">So far, here is the most simple price chart of NVDA stock within the past 100 days. <strong>I don&#39;t see any panic yet from the &#34;truth machine&#34;, do you?</strong> You can decide for yourself is you see any DeepSeek news related panic. But let&#39;s wait till 2 weeks after the next earnings to unveal further &#34;truth&#34;.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/c232155f0c94afcf4599dd5875452b7c\" title=\"NVDA trading range: $127-$152 (100 days). Weekly chart.\" tg-width=\"900\" tg-height=\"425\"/><span>NVDA trading range: $127-$152 (100 days). Weekly chart.</span></p><h2 id=\"id_1683244735\">Also Read: How small Chinese AI start-up DeepSeek shocked Silicon Valley</h2><p>Source: The Financial Times</p><p>A small Chinese artificial intelligence lab stunned the world this week by revealing the technical recipe for its cutting-edge model, turning its reclusive leader into a national hero who has defied US attempts to stop China’s high-tech ambitions. </p><p>DeepSeek, founded by hedge fund manager Liang Wenfeng, released its R1 model on Monday, explaining in a detailed paper how to build a large language model on a bootstrapped budget that can automatically learn and improve itself without human supervision.</p><p>US companies including OpenAI and Google DeepMind pioneered developments in reasoning models, a relatively new field of AI research that is attempting to make models match human cognitive capabilities. In December, the San Francisco-based OpenAI released the full version of its o1 model but kept its methods secret. </p><p>DeepSeek’s R1 release sparked a frenzied debate in Silicon Valley about whether better resourced US AI companies, including Meta and Anthropic, can defend their technical edge.</p><p>Meanwhile, Liang has become a focal point of national pride at home. This week, he was the only AI leader selected to attend a publicised meeting of entrepreneurs with the country’s second-most powerful leader, Li Qiang. The entrepreneurs were told to “concentrate efforts to break through key core technologies.”</p><p>In 2021, Liang started buying thousands of Nvidia graphic processing units for his AI side project while running his quant trading fund High-Flyer. Industry insiders viewed it as the eccentric actions of a billionaire looking for a new hobby.</p><p>“When we first met him, he was this very nerdy guy with a terrible hairstyle talking about building a 10,000-chip cluster to train his own models. We didn’t take him seriously,” said one of Liang’s business partners. </p><p>“He couldn’t articulate his vision other than saying: I want to build this, and it will be a game change. We thought this was only possible from giants like ByteDance and Alibaba,” the person added. </p><p>Liang’s status as an outsider in the AI field was an unexpected source of strength. At High-Flyer, he built a fortune by using AI and algorithms to identify patterns that could affect stock prices. His team became adept at using Nvidia chips to make money trading stocks. In 2023, he launched DeepSeek, announcing his intention to develop human-level AI.</p><p>“Liang built an exceptional infrastructure team that really understands how the chips worked,” said one founder at a rival LLM company. “He took his best people with him from the hedge fund to DeepSeek.”</p><p>After Washington banned Nvidia from exporting its most powerful chips to China, local AI companies have been forced to find innovative ways to maximise the computing power of a limited number of onshore chips — a problem Liang’s team already knew how to solve.</p><p>“DeepSeek’s engineers know how to unlock the potential of these GPUs, even if they are not state of the art,” said one AI researcher close to the company. </p><p>Industry insiders say DeepSeek’s singular focus on research makes it a dangerous competitor because it is willing to share its breakthroughs rather than protect them for commercial gains. DeepSeek has not raised money from outside funds or made significant moves to monetise its models.</p><p>“DeepSeek is run like the early days of DeepMind,” said one AI investor in Beijing. “It is purely focused on research and engineering.”</p><p>Liang, who is personally involved in DeepSeek’s research, uses proceeds from his hedge fund trading to pay top salaries for the best AI talent. Along with TikTok-owner ByteDance, DeepSeek is known for giving the highest remuneration available to AI engineers in China, with staff based in offices in Hangzhou and Beijing.</p><p>“DeepSeek’s offices feel like a university campus for serious researchers,” said the business partner. “The team believes in Liang’s vision: to show the world that the Chinese can be creative and build something from zero.”</p><p>DeepSeek and High-Flyer did not respond to a request for comment.</p><p>Liang has styled DeepSeek as a uniquely “local” company, staffed with PhDs from top Chinese schools, Peking, Tsinghua and Beihang universities rather than experts from US institutions.</p><p>In an interview with the domestic press last year, he said his core team “did not have people who returned from overseas. They are all local . . . We have to develop the top talent ourselves”. DeepSeek’s identity as a purely Chinese LLM company has won it plaudits at home. </p><p>DeepSeek claimed it used just 2,048 Nvidia H800s and $5.6mn to train a model with 671bn parameters, a fraction of what OpenAI and Google spent to train comparably sized models.</p><p>Ritwik Gupta, AI policy researcher at the University of California, Berkeley, said DeepSeek’s recent model releases demonstrate that “there is no moat when it comes to AI capabilities”.</p><p>“The first person to train models has to expend lots of resources to get there,” he said. “But the second mover can get there cheaper and more quickly.”</p><p>Gupta added that China had a much larger talent pool of systems engineers than the US who understand how to get the best use of computing resources to train and run models more cheaply.</p><p>Industry insiders say that even though DeepSeek has shown impressive results with limited resources, it remains an open question whether it can continue to be competitive as the industry evolves.</p><p>Returns at High-Flyer, its big backer, lagged behind in 2024, which one person close to Liang blamed on the founder’s attention being mostly focused on DeepSeek.</p><p>Its US rivals are not standing still. They are building mega “clusters” of Nvidia’s next-generation Blackwell chips, creating the computing power that threatens to once again create a performance gap with Chinese rivals.</p><p>This week, OpenAI said it was creating a joint venture with Japan’s SoftBank, dubbed Stargate, with plans to spend at least $100bn on AI infrastructure in the US. Elon Musk’s xAI is massively expanding its Colossus supercomputer to contain more than 1mn GPUs to help train its Grok AI models.</p><p>“DeepSeek has one of the largest advanced computing clusters in China,” said Liang’s business partner. “They have enough capacity for now, but not much longer.” </p></body></html>","source":"lsy1623168602413","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Will Chinese DeepSeek Disrupt Nvidia?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWill Chinese DeepSeek Disrupt Nvidia?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-01-26 12:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.forexlive.com/news/will-chinese-deepseek-disrupt-nvidia-20250125/><strong>Forexlive</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Will Chinese DeepSeek Disrupt NVIDIA and the American AI Industry?The global AI race has taken an intriguing turn with the emergence of China's DeepSeek, touted by some as a potential disruptor to ...</p>\n\n<a href=\"https://www.forexlive.com/news/will-chinese-deepseek-disrupt-nvidia-20250125/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NVDA":"英伟达"},"source_url":"https://www.forexlive.com/news/will-chinese-deepseek-disrupt-nvidia-20250125/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1153606736","content_text":"Will Chinese DeepSeek Disrupt NVIDIA and the American AI Industry?The global AI race has taken an intriguing turn with the emergence of China's DeepSeek, touted by some as a potential disruptor to NVIDIA's dominance in the AI hardware space. As speculation swirls, stock investors, analysts, and thought leaders are left grappling with the critical question: Is DeepSeek a genuine threat to NVIDIA and the broader American AI industry, or is this a case of overhyped news amplified by interested parties?The news that DeepSeek's model surpassed OpenAI's o1 in specific reasoning tests has sparked intense debate within the AI community. This development has significant implications for the AI market, potentially impacting the stock prices of companies like NVIDIA and other AI-related companies.I’ll preface this by saying that I am not a renowned expert in deep technology or AI hardware. I don’t claim to have a definitive answer. Instead, I propose a method to find the answer—not by theorizing endlessly but by observing how the stock market reacts. The stock market, with its collective wisdom and ability to process information, often acts as the closest thing we have to a truth detector.Let’s explore the context, evaluate the key factors at play, and develop a logical framework to assess the significance of DeepSeek’s emergence.The Landscape: NVIDIA’s Moat vs. DeepSeek’s PromiseNVIDIA has long been the undisputed leader in AI hardware, leveraging its GPUs and CUDA software ecosystem to dominate the market. Its ecosystem is sticky—developers, hyperscalers, and enterprise clients are deeply entrenched in its platform, creating significant switching costs. This is not unlike Apple’s ecosystem, where loyal users and interconnected services create barriers to exit.DeepSeek, on the other hand, reportedly offers a more cost-efficient AI solution. The analogy some have drawn is that DeepSeek could be the “cheaper smartphone” to NVIDIA’s “iPhone.” In the smartphone industry, the availability of cheaper alternatives has undeniably shifted market share, particularly in emerging markets. But did this disrupt Apple’s stock price or its dominance among its loyal user base? Not significantly. The same could apply to NVIDIA, depending on whether DeepSeek can replicate NVIDIA’s ecosystem or merely compete on price and performance.The Role of Market Reactions: Finding the Answer in the PriceHere’s where the stock market comes in. Instead of relying solely on speculative opinions, I suggest that the best way to gauge the impact of DeepSeek is to observe NVIDIA’s stock price. The stock market is often a better truth-teller than any single analysis. It reflects collective sentiment, informed by analysts, insiders, and countless external factors.What to Watch:The Reaction to the NewsSince the DeepSeek news broke, NVIDIA’s stock has not shown any drastic reaction. It actually rose apx 2.5% after the news came out, if we look at NVDA stock price from the next day it traded, to the close of the week. This lack of significant movement, not to mention lack of stock price decline (crash...?) -- suggests that the market does not yet see DeepSeek as a significant disruptor. If it were, we would expect a sharp and sustained price decline. Who remembers other cases, such as Facebook’s Cambridge Analytica scandal a few years ago and the immediate FB stock decline?Earnings as a CatalystNVIDIA’s upcoming earnings report will be pivotal. Pay close attention to management’s commentary, particularly regarding competitive risks in the AI space. If DeepSeek is a genuine threat, it could show up in NVIDIA’s guidance or performance, especially in its data center segment. I propose observing NVIDIA’s stock price from the time the news broke until two weeks after earnings. This period should provide enough data to assess whether DeepSeek is having a tangible impact, even if will not be talked about. The price knows, and it almost always knows better than you, or anyone else.Interpreting the Price Action Post Upcoming Nvidia Earnings (Scheduled for 26 Feb 2025): What It Might Tell UsNVDA stock price is your best guide to the \"truth\"Scenario 1 for the Upcoming Nvidia Earnings Report: Stock Rises or Remains StableIf NVIDIA’s stock rises or stays within its current range, the market is likely signaling that DeepSeek is not a major disruptor. Perhaps NVIDIA’s ecosystem is too entrenched, or DeepSeek’s solution doesn’t offer enough differentiation. It’s also possible that other factors, such as AI demand growth or NVIDIA’s new Blackwell chips, outweigh any competitive threats.Scenario 2 for the Upcoming Nvidia Earnings Report: Stock DeclinesIf NVIDIA’s stock declines, the reasons warrant closer examination. Is the drop due to bottlenecks in Blackwell chip deliveries, macroeconomic pressures, or broader market trends? Or does it reflect legitimate concerns about DeepSeek? Analysts will need to scrutinize earnings commentary, data center revenue trends, and any shifts in market share. It’s critical to avoid jumping to conclusions without understanding the underlying reasons for the decline.The Unknowns: Factors and Their WeightsOne of the challenges in analyzing stock movements is that we can never know all the factors affecting a stock price, nor the relative weights of those factors. We might think we know, we may hear great explanations, but we don't exacly know. Earnings reports often illustrate this: a company might beat revenue and EPS estimates, yet the stock declines. Analysts scramble to explain why—was it slower sales growth, weaker guidance, or some other reason? The reality is that the stock market processes countless variables simultaneously, and not all of them are visible to us. The granular variables and their weights will never be known to us. But price knows.The same principle applies here. Even if NVIDIA’s stock remains stable, it’s possible that DeepSeek is a growing threat but not yet significant enough to outweigh other factors. Conversely, if the stock declines, DeepSeek may not be the primary cause. This complexity is why I emphasize looking at the stock price holistically and over time, rather than rushing to judgment based on short-term moves.Seeking the Deep Behind DeepSeek: Trust the Price, Not the NewsDeepSeek’s potential to disrupt NVIDIA and the American AI industry is an open question, but the best way to find an answer is to let the stock market speak. Watch NVIDIA’s price action from the time the news broke until two weeks after its upcoming earnings. If the stock remains stable or rises, it’s likely that DeepSeek is not a significant threat. If it declines, dig deeper into the reasons—whether they’re related to DeepSeek or other factors.While price action can act as a “truth detector,” it’s not infallible. The market may not immediately price in all information, and short-term movements can be influenced by noise, speculation, or interested parties (e.g., short sellers amplifying fears about DeepSeek). As always, exercise caution and remain open to multiple interpretations. But do follow the price more than anyone's opinion, especially yours.Ultimately, the price knows. Follow the money. Follow the price and you shall be closer to finding the truth.So far, here is the most simple price chart of NVDA stock within the past 100 days. I don't see any panic yet from the \"truth machine\", do you? You can decide for yourself is you see any DeepSeek news related panic. But let's wait till 2 weeks after the next earnings to unveal further \"truth\".NVDA trading range: $127-$152 (100 days). Weekly chart.Also Read: How small Chinese AI start-up DeepSeek shocked Silicon ValleySource: The Financial TimesA small Chinese artificial intelligence lab stunned the world this week by revealing the technical recipe for its cutting-edge model, turning its reclusive leader into a national hero who has defied US attempts to stop China’s high-tech ambitions. DeepSeek, founded by hedge fund manager Liang Wenfeng, released its R1 model on Monday, explaining in a detailed paper how to build a large language model on a bootstrapped budget that can automatically learn and improve itself without human supervision.US companies including OpenAI and Google DeepMind pioneered developments in reasoning models, a relatively new field of AI research that is attempting to make models match human cognitive capabilities. In December, the San Francisco-based OpenAI released the full version of its o1 model but kept its methods secret. DeepSeek’s R1 release sparked a frenzied debate in Silicon Valley about whether better resourced US AI companies, including Meta and Anthropic, can defend their technical edge.Meanwhile, Liang has become a focal point of national pride at home. This week, he was the only AI leader selected to attend a publicised meeting of entrepreneurs with the country’s second-most powerful leader, Li Qiang. The entrepreneurs were told to “concentrate efforts to break through key core technologies.”In 2021, Liang started buying thousands of Nvidia graphic processing units for his AI side project while running his quant trading fund High-Flyer. Industry insiders viewed it as the eccentric actions of a billionaire looking for a new hobby.“When we first met him, he was this very nerdy guy with a terrible hairstyle talking about building a 10,000-chip cluster to train his own models. We didn’t take him seriously,” said one of Liang’s business partners. “He couldn’t articulate his vision other than saying: I want to build this, and it will be a game change. We thought this was only possible from giants like ByteDance and Alibaba,” the person added. Liang’s status as an outsider in the AI field was an unexpected source of strength. At High-Flyer, he built a fortune by using AI and algorithms to identify patterns that could affect stock prices. His team became adept at using Nvidia chips to make money trading stocks. In 2023, he launched DeepSeek, announcing his intention to develop human-level AI.“Liang built an exceptional infrastructure team that really understands how the chips worked,” said one founder at a rival LLM company. “He took his best people with him from the hedge fund to DeepSeek.”After Washington banned Nvidia from exporting its most powerful chips to China, local AI companies have been forced to find innovative ways to maximise the computing power of a limited number of onshore chips — a problem Liang’s team already knew how to solve.“DeepSeek’s engineers know how to unlock the potential of these GPUs, even if they are not state of the art,” said one AI researcher close to the company. Industry insiders say DeepSeek’s singular focus on research makes it a dangerous competitor because it is willing to share its breakthroughs rather than protect them for commercial gains. DeepSeek has not raised money from outside funds or made significant moves to monetise its models.“DeepSeek is run like the early days of DeepMind,” said one AI investor in Beijing. “It is purely focused on research and engineering.”Liang, who is personally involved in DeepSeek’s research, uses proceeds from his hedge fund trading to pay top salaries for the best AI talent. Along with TikTok-owner ByteDance, DeepSeek is known for giving the highest remuneration available to AI engineers in China, with staff based in offices in Hangzhou and Beijing.“DeepSeek’s offices feel like a university campus for serious researchers,” said the business partner. “The team believes in Liang’s vision: to show the world that the Chinese can be creative and build something from zero.”DeepSeek and High-Flyer did not respond to a request for comment.Liang has styled DeepSeek as a uniquely “local” company, staffed with PhDs from top Chinese schools, Peking, Tsinghua and Beihang universities rather than experts from US institutions.In an interview with the domestic press last year, he said his core team “did not have people who returned from overseas. They are all local . . . We have to develop the top talent ourselves”. DeepSeek’s identity as a purely Chinese LLM company has won it plaudits at home. DeepSeek claimed it used just 2,048 Nvidia H800s and $5.6mn to train a model with 671bn parameters, a fraction of what OpenAI and Google spent to train comparably sized models.Ritwik Gupta, AI policy researcher at the University of California, Berkeley, said DeepSeek’s recent model releases demonstrate that “there is no moat when it comes to AI capabilities”.“The first person to train models has to expend lots of resources to get there,” he said. “But the second mover can get there cheaper and more quickly.”Gupta added that China had a much larger talent pool of systems engineers than the US who understand how to get the best use of computing resources to train and run models more cheaply.Industry insiders say that even though DeepSeek has shown impressive results with limited resources, it remains an open question whether it can continue to be competitive as the industry evolves.Returns at High-Flyer, its big backer, lagged behind in 2024, which one person close to Liang blamed on the founder’s attention being mostly focused on DeepSeek.Its US rivals are not standing still. They are building mega “clusters” of Nvidia’s next-generation Blackwell chips, creating the computing power that threatens to once again create a performance gap with Chinese rivals.This week, OpenAI said it was creating a joint venture with Japan’s SoftBank, dubbed Stargate, with plans to spend at least $100bn on AI infrastructure in the US. Elon Musk’s xAI is massively expanding its Colossus supercomputer to contain more than 1mn GPUs to help train its Grok AI models.“DeepSeek has one of the largest advanced computing clusters in China,” said Liang’s business partner. “They have enough capacity for now, but not much longer.”","news_type":1},"isVote":1,"tweetType":1,"viewCount":600,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":310,"optionInvolvedFlag":false,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/396980351357376"}