Nvidia lost at least $580 billion in market value on Monday, reminding everyone the ephemeral nature of category-kings in the knowledge era. When factors of production are anchored around KNOWLEDGE, many things can happen within weeks. Yes, today’s state of the art is limited by today’s knowledge. As that knowledge evolves and advances, new market positionings are created.
This explains why some people prefer boring investments in cement, railways and those domains where the moats cannot be calibrated out overnight through new knowledge anchored on technology. Chinese DeepSeek which wiped close to $1 trillion in markets around the world did not capture most of those since it is not worth $1 trillion. What happened? It “destroyed’ value for those incumbents and saved value for customers. Whenever you see that happening at scale, you have disruptive innovation.
Good People, DeepSeek is not done yet; it only opened the veil. Some US companies are already incorporating its open-source model. That means, the trajectory will continue on reducing the cost for the development and commercialization of AI systems.
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I did receive an invitation from the Chinese government for a major semiconductor program; they will pay up to $280k for about two weeks of work, per year, for up to three years (invitation below). Sure, one cannot take this one due to export control restrictions in America; the executive order restricts what many American semiconductor engineers can do in China. Nonetheless, when you look at how far China can go to assemble a winning team, you will respect that nation.
This is a golden era for microelectronics and semiconductors experts! From Taiwan to China, Brazil to Indonesia, governments are unloading with cash to attract experts in this game.
I respect China. I respect America. These are great countries. I am hoping one day that Nigeria will join this fray. Meanwhile, Nvidia will be fine. If everything becomes cheaper, more people will need the solution, and that means via volume it will even make more money.
The accelerating exclusivity on AI development which DeepSeek has punctured is good for Nvidia, America, China and the whole world over the long-term because in this cloud era, the idea that you must raise at least $1b to build these core models was unfortunate. I commend DeepSeek for the liberation.
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Few people are using everyone else to cash out, and whenever they are caught, they move to another thing and continue their speculation. If DeepSeek continues on this trajectory, you will no longer hear many beautiful things AI can and will do, not because it can no longer do those things but rather the money has moved. Is Bitcoin still very high? Because players and speculators must have a shelter, where they can hide and continue telling you where the future is.
If AI fails to recover its aura and dizzying attention in the coming weeks, a new talking point will emerge. The ‘market’ is currently in a thinking mode. Food and energy still own civilization. There’s a reason why the most essential things don’t attract hype and are not ‘sexy’, if they were to be, survival will be at stake. The game is the game.