What’s The Big Deal About DeepSeek?

It’s Tuesday morning, and my eyes pop open just before the alarm goes off at 5:25 AM.

Immediately I grab my phone and check the overnight markets.

WHOA!

The NASDAQ is deep in the red. Its biggest drop in two years.

In one trading session, market darling Nvidia has… wait for it… had ONE TRILLION dollars wiped off its share value. Incredibly, that’s only 16% of its value.

To give it some local context, one trillion dollars is five BHPs gone in a few hours.

So, who the hell is Nvidia?

The easiest way to understand Nvidia is to analogize it with the car industry.

Imagine, for a moment, there’s only one company supplying car chassis to every automaker.

That’s Nvidia in the world of AI.

It supplies the high-powered chips that fuels the entire AI boom.

And if you’re wondering how powerful the Nvidia chassis is, here’s a snippet…

Nvidia’s chips are about the size of a 50-cent coin, yet they can perform a trillion calculations in a nano-second.

Try getting your grey matter around that one.

In fact, these chips are so powerful their servers need eleven times more water than an email server to cool them down.

Plus, they need a heap of power.

Just ask Elon. His new AI app, ‘Grok,’ is so powerful his big shiny bank of solar batteries can’t keep up, so he’s had to plug into the main power grid.

But back to Nvidia…

Why did it lose one trillion dollars in value this week?

A few months ago, a group of very clever Chinese people had a brainstorming session over a big plate of dim sims and came up with an idea called DeepSeek.

Simply put, DeepSeek is an AI platform just like ChatGPT, CoPilot, Meta, Grok, etc.

It’s another car.

However, unlike all the other AI platforms, which have cost tens of billions to build, DeepSeek allegedly only cost about five million.

And this is where things get spicy…

While we were stuffing our chops with lamb last weekend, the internet was white-hot with rumors that DeepSeek was about to disrupt the major AI players – especially Nvidia.

And by Monday morning, it was the most downloaded app in the world.

So when the US markets opened on Monday night, all the talking heads had whipped themselves into a frenzy, and the market believed them – hence the sell-off.

But here’s the funny bit, and it really is funny…

Nvidia is a chassis, and DeepSeek is a car.

Meaning, DeepSeek is not a threat to Nvidia.

And it gets better…

It’s Chinese-hosted, and reports suggest that any data entered into DeepSeek may be accessible by the Chinese government. That’s a risk I wouldn’t take.

But, incredibly, it seems no one checked.

Last night, Nvidia’s share price finished 20% down for the week.

So, would I be a buyer at these prices?

Nvidia is still very expensive and based on current earnings (profits), it would take 90 years to pay off. (Fair value is 14-16 years).

I’d hit the snooze button and roll over.

Have a great weekend!

Back paddock – workers talk about going to the pub, and then, when they get there, they talk about work!

Footy season will fix all that.