It’s like a Netflix and a Half Just Vanished Yesterday. [Podcast]

Yesterday, Nvidia—the company which makes GPUs, including for AI— suffered the largest single-day market value loss in history. The stock dropped 17.4% wiping $600 billion from its valuation in hours, and actually pulling the entire Nasdaq Composite down 3.4%. To put that in perspective, this amount of value loss is like if the entire company of Netflix AND AT&T simply disappeared. What caused this? A Chinese AI startup called DeepSeek. Over the weekend, it revealed a new large language model (LLM) that matches the output of OpenAI’s ChatGPT and similar models but at a fraction of the cost. Here’s the kicker: DeepSeek trained its LLM with just $5 million and 2,000 low-tech Nvidia GPUs. Compare that to ChatGPT’s $100 million budget and over 100,000 cutting-edge GPUs. Venture capitalist Marc Andreessen called this AI’s Sputnik moment. And that’s true. It was 1957 when the Soviets launched Sputnik into space, which made the Americans realize how much they needed to catch up. There was a lot of panic yesterday, and it’s easy to understand why. The whole industry felt they had a competitive advantage that no longer exists. But the reality is, this is good news for everyone. And this is the topic of our podcast today. Many of you know that I’m the chairman of a emerging technology company which makes extremely powerful and efficient semiconductors. It’s completely unrelated to AI, so DeepSeek doesn’t have any impact. But I reached out to a number of people in the business to help me understand this better. And overall there are a few conclusions that are pretty obvious. One, Nvidia is still going to be able to sell all the GPUs they can produce. The difference is now they will be selling to more people. The days of Nvidia delivering GPUs by armored car are long gone. And now these professional grade chips are going to be available to even the lowliest of AI start-ups. It also means that AI start ups can launch their businesses and develop their technology with a smaller amount of money. Instead of having to raise half a billion dollars just to get started, they can create a viable product for just a few million dollars now. That means more innovation, and hence more productivity for everyone. The last thing is the market rout yesterday was classic overreaction and panic that extended to sectors that still have me scratching my head. There was even a sell-off in natural gas stocks, which is absurd. We talk a lot about real assets, and why they are such a smart buy right now. And natural gas companies are a great example. Some of these businesses are well managed, profitable, dividend paying, and have pristine balance sheets. And yet the market is now giving them away. We discuss all this and more in today’s short podcast. https://youtu.be/iNV0PQOLSN8 PS- Starting today we’re launching a promotion on The 4th Pillar, our premium investing newsletter that focuses on undervalued real asset businesses. Click here to learn more.