Monday, January 27th 2025
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Tech Stocks Brace for a DeepSeek Haircut, NVIDIA Down 12% in Pre-market Trading
The DeepSeek open-source large language model from China has been the hottest topic in the AI industry over the weekend. The model promises a leap in performance over OpenAI and Meta, and can be accelerated by far less complex hardware. The AI enthusiast community has been able to get it to run on much less complex accelerators such as the M4 SoCs of Mac minis, and gaming GPUs. The model could cause companies to reassess their AI strategy completely, perhaps pulling them away from big cloud companies, toward local acceleration on cheaper hardware; and cloud companies themselves would want to reconsider their orders of AI GPUs in the short-to-medium term.
All this puts the supply chain of AI acceleration hardware in a bit of a spot. The NVIDIA stock is down 12 percent in pre-market trading as of this writing. Microsoft and Meta Platforms also faced a cut, shedding over 3% each. Alphabet lost 3% and Apple 1.5%. Microsoft, Meta and Apple are slated to post their quarterly earnings this week. Companies within NVIDIA's supply chain, such as ASML and TSMC, also saw drops, with ASML and ASM International losing 10-14% in European pre-trading.
Sources:
LiveMint, The Kobeissi Letter
All this puts the supply chain of AI acceleration hardware in a bit of a spot. The NVIDIA stock is down 12 percent in pre-market trading as of this writing. Microsoft and Meta Platforms also faced a cut, shedding over 3% each. Alphabet lost 3% and Apple 1.5%. Microsoft, Meta and Apple are slated to post their quarterly earnings this week. Companies within NVIDIA's supply chain, such as ASML and TSMC, also saw drops, with ASML and ASM International losing 10-14% in European pre-trading.
102 Comments on Tech Stocks Brace for a DeepSeek Haircut, NVIDIA Down 12% in Pre-market Trading
I'm interested in trying out DeepSeek on my computer too.
If we get a 2000/2 style tech correction.
Looks like the bond market knew, 10y-3m, similar to 2020.
Also when the US sanctions a country, that country has to learn how to do more with less. Looks like China succeeded in doing this.
Finally Strix Halo is probably looking really good right about now and SoCs don’t have sanctions so AMD is free to sell as many SoCs to China as they want. Their close relationship with Lenovo might also pay off.
What the market is concerned about is that such a capable model could be trained with ~5M USD worth of compute (excluding GPU costs). That doesn't mean though that putting more compute on it won't improve the results...
Edit: Damnit. He already found my post!
X/Twitter has yet to make money for a year as well... Money isn't the biggest thing to chase here. The real prize is power and information dominance.
Money is just a means not an end. There's a war going on here.
Remember that Sutskever circus about responsible AI? It fits right in. The power struggle at OpenAI, MS, etc.? Yep. This is all big tech trying to create their Cyberpunk future here. They've already openly accepted government posts just now. The dystopia is real
The situation is so bad that I don't even care that DeepSeek is Chinese! They are the lesser evil here.
Looking forward to see better models from meta microsoft and deepseek.
And looking forward to see some 40GB cards for consumers in the near future from nvidia!
When I bought my 7900XT, did even think that I will be the most happy of the 20GB VRAM :D
Which I guess is a fairly big problem for those that already sunk billions in to hardware...
Just look at the car industry, BYD is eating the EV market up, and mr orange face can't do anything about it, other than imposing his most beloved word: tariffs.
It seems the majority of the cost is training the model. They took the model that was trained and "Distilled it" i.e. they essentially copied openai's homework that they spent so much time and money crunching and then added their own improvements on top.
It's like if Luis Vitton made a handbag and they took that design, improved it and then manufactured it for 1/20th of the cost...
But essentially this wouldn't exist if it was not for the already trained models out there, so there will be a fight about IP in the AI space coming soon, especially all those people that sunk money into open AI I imagine they're a bit salty about this.
That's what's really dangerous about this... it isn't the AI portion of it - it's the fact that alot of very rich people sunk alot of money into making something that just got used to leapfrog the thing they sunk money into. Historically that tends not to end too well.
arxiv.org/abs/2501.12948
It's the the smaller models released together with it that were "distilled' from DeepSeek R1 outputs.
There are reams of sites on the internet doing eBooks and the like without any DRM (not going to link them here obv!). Nothing to stop anyone who wants to train a model just scraping (downloading) all that and inputting it. Literally tens or hundreds of thousands of books, then there's all the content out on the web you can just create a bot and try to crawl like Google et al do. They can try to block you, but if you're spoofing user agents and using consumer IP addresses combined with bot detection defeating technology, it's very hard to.
Even getting data to train a model can be done on a shoe string.
Maybe I'm just butthurt because my nVidia stock is tanking.....
The people that sank trillions of dollars into open ai, and said other models, thats what they will see. Add to that a general distrust of AI announcements from Chinese firms/labs and voila. A large amount of capital is about to have/is having a hissy fit.
It gets 6 tokens/s with 1 Epyc CPU, using the 12-channel SP5 platform, with a maximum memory bandwidth 576 GB/s, per CPU.
The DDR4 platform gets <2 tokens/s, but with a few RTX3090 you can get it to usable speed.
You still need an expensive machine, but with used parts, its doable for an individual.