Earlier quoted context omitted.
While everything you say may be true, this shows a fundamental misunderstanding about how the modern stock market functions. How much value a company creates is at best tangential and often completely orthogonal to how much the stock is worth. The stock market has always been a Keynesian beauty contest, but in the past few decades, strongly shaped and morphed by attention economies. A good example of this is DJT, a c…
I understand that part, hence why this is very much buy the dip for me.
It's not just the usual herding behavior though. There's a convex response to news like this because people look at higher order effects like the growth of growth for stocks. Basically the DeepSeek story is about needing 40x fewer compute resources to run inference if their benchmarks are true. The dip doesn't mean that NVidia is now doomed, it simply means that if DeepSeek is legit, you need much less NV hardware to run the same amount of inference as before. Will the demand rise to still use up all the built hardware? Probably, but we went from a very stratospheric supply constraint to a slightly less stratospheric one, and this is reflected in the prices. Generally these moves are exaggerated initially, and it takes a bit of time for people to digest the information and the price to settle. It's an oscillating system with many feedback loops.