From Out of the Loop:
this post was submitted on 27 Jan 2025
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Is the AI bubble collapsing yet?
Because it's high time - before the US commits billions to this nonsense for nothing.
Unfortunately, hundreds of billions have already been invested.
Not public money.
I don't give a shit if big tech monopolies lose their shirt on AI. But Trump wants to spend insane amounts of taxpayer's money on this shit. So if it should proves less expensive than it needs to be, now is the right time.
Billions have already been spent on building chip fabs which will never be profitable.
Yes, China is doing the US taxpayer a solid by giving them an opportunity to prevent losing money on AI, but I think this administration is going to find a way to send those billions to silicon valley anyway.
The chip fabs are not an issue, we will always need more chips
Fair point, though in our world of graying public/private distinction it's important to note that those companies spending hundreds of billions will want a return on their investment, whether that's voluntary or forcing the government to buy their shit at exorbitant prices.
Probably more of an AI-infrastructure-bubble collapse.
To use the old Gold Rush analogy—it’s like investors assumed the real money would be in selling pickaxes, but the miners just discovered they don’t actually need them.
I am enjoying this with every fiber of my being 🙏
I don’t understand why people are selling off. AI companies will just make bigger models, and then everything will be back to the same cost of compute again.
You're trying to understand the stock market? Lol
That’s the problem. It’s irrational and has always been.
Opportunity cost, why keep your money in company A that can give you 1.01 for each 1 invested, when company B is giving 1.011?
Yeah, but if anything, this should be good news for Nvidia. Better access to software is good for hardware companies. This is mostly bad news for software companies like OpenAI who got lots of catching up to do.
I don't get it either. If this makes it easier for smaller companies to run their OWN offline as well as computer hobbyists, etc....won't it just mean more demand from all the individuals/companies vying to buy hardware to run it?
If I was a large company I sure as fuck would not be using some of the things like Copilot, etc. and sending all my data to a possible competitor. I'd be putting up a bit of cash and figuring out how to use models offline.
The reasoning is that people will stop buying their most expensive hardware offerings. This doesn’t make much sense either. Someone will come up with something clever to do with all that new compute, and then the demand for expensive hardware will be back again.
I understand why this is terrible news for OpenAI. Their entire competitive edge was that they’ve invested billions to build their GPT models. Anyone who wants to get to their levels must do the same investments.
If what’s being said about DeepSeek is true, then their entire competitive edge has just vanished overnight. Billion dollar investment: gone. It’s going to be hard for them to make the return they hoped to make from their investment.
Nvidia hasn’t lost their competitive edge. They’re still making the best hardware for AI computing. The demand for AI compute is likely going to increase.
It’s also embarrassing for OpenAI. How could they have missed this?
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It's because it's a bubble. There's no tenable product that's worth anywhere near the amount of money that people are/were pumping into the stocks.
Now there's competition. So investors have to choose, who do they think is going to be more successful in the future? And that's a decision based on the predicted value of the actual product.
And if we're only talking about NVidia, they didn't have any competition until now. So of course their stock was going to tank.
DeepSeek isn’t a competitor to Nvidia. They’re not making better hardware. They’re just making better software, and more accessible. Better access to software is only good for hardware companies.
And this doesn’t change the future outlook of AI. More efficient AI software just improves that outlook. Now there’s suddenly a great new potential for improved AI models.
This is bad news for OpenAI, who relies on their exclusive access to the GPT models. Good news for Nvidia, because now they’re going to sell hardware to anyone who want to take OpenAI’s throne.
From what I've read, bigger models don't necessarily mean better results - at least not past a certain point.
i know absolutely nothing about investing. so this is a lay take:
before today i would invest in these ai big tech companies because ai is the next big thing, and there's no other real competition around and any coming up might be ready in 3 or 4 years maybe.
after today's news, why would i waste my money investing in companies that are building wasteful, energy consuming, and most importantly proprietary components when there's a new generative ai that is just as good, if not better, than what's available now, that runs on far cheaper components that is totally open sourced? i'm better off taking that money i was going to use to invest in big tech and putting it towards hiring some programmers to take the completely open sourced ai and modifying it to better suit my specific needs.
Just wait for the government to ban this AI so they can continue to inflate their own AI bubble and cashout before it pops.
That's not how things work.
It works that way for electric cars. You won't find many BYD electric cars in the US, yet they are the top-selling battery electric vehicle manufacturer worldwide. Only thing stopping them from doing the same with this, is that it's a tensy bit tougher to gatekeep information than a car.
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Yeah we famously have never banned computers from doing things computers can do anytime, for any reason. Never have!
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That is how trump works.
I'm not saying this will happen but if last week was any indication, this will happen
I mean Trump can ban it but "the bubble" reacts to reality, and in reality this model will continue to exist and potentially get better.
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Does the new AI not run on their hardware?
The Nvidia stock is based on expected demand. The idea is they are the top dog when it comes to Ai compute. So as the world ramps up in putting shitty Ai in everything we can, the future demand on Nvidia stuff goes up and up. No serious competition is expected, so people are buying stock in expectation of huge profits in the future. So for a brief time right before the resource hungry shitty Ai destroys the planet, a lot of rich people will become even richer than before.
However this new Ai has shown you can make a just as shitty Ai, but using a lot less compute. This not only lowers the demand for Nvidia products, because less compute is needed. It also boosts supply because less capable competitor hardware might be in the running after all.
The stock market is pretty dumb, so instead of being fully dependent on supply and demand, it's also heavily based on expected supply and demand, which in turn are based on promises and hype. And because it's become so easy to trade these days, it can get very volatile because there are traders that just jump on any hype train and sell at the first sign of trouble. These amplify stock movements a lot. This has lead to the dot com bubble in overdrive, a lot of stock is so hyper inflated it isn't connected to reality anymore. See for example Tesla stock or in this case Nvidia.
So yeah basically late stage capitalism at work.
It does, they just used wayyy fewer resources compared to the likes of openAI/meta etc.
Oh no. Anyway...
I’m not sure if Nvidia’s investors are accounting for Jevons paradox.
It's Chinese, of course it was cheap. It was likely half stolen and half made by underpaid labor. It is also super censored when you ask it about a lot of topics xijingpooh doesn't like.
E: Getting my daily dose of social credit downvotes from the CCP shills, haha! Just because you won and own our president doesn't mean the population will follow suit.
Downvoted, but I also wonder if their narrative is entirely correct. I mean, this is a Chinese company we are talking about, let's not kid ourselves....
Twice in this thread, you've questioned the honesty of this Chinese company, racist much?
I wonder how much it shakes your western bubble
LOL, it's not racist to question all the claims being made, especially given the context. JFC.
Chinese product is known for being cheap and their ripoff economy is legendary, but these dolts will cry racism because it makes them feel special (or they are CCP shills from .ml).
Well, it turns out our suspicions were on the mark....gosh, a Chinese company not being forthright? Who would have guessed.
Yeah, but we are the sinophobic alarmists...sigh. To be fair, these are the same people that said "but his second term will be fine, we survived the first one".
Agreed. There is being open-minded and then there is just being completely naive about the political situation when it comes to all things Chinese (I happen to have a very good idea of this from things I've found out during my career).
I've already downloaded and tried it out, but apparently if you have some reservations about accepting all claims being made without any questions, that's beyond the pale? LOL, that is one hot take.
It’s also open source and you can run it locally without a super beefy GPU. The big deal is that it’s super light on resources compared to GPT, while producing comparable results. It’s only a question of time until someone makes a less censored version of it.
Either way, OpenAI is doomed unless they have something up their sleeves.
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Do investors think DeepSeek is powering their AI with magic? They are using NVIDIA chips.
Well that means we have to outlaw nvidia, obviously!
I do wonder if the story this Chinese company is telling is the entire truth, though.
You can download the model and see for yourself
I already have downloaded two different sizes of the r1 model and am running them on Ollama.
I mean about the number of chips they had access to and how much time/money it took to train, etc.