The impact of competition and DeepSeek on Nvidia • Hacker News Board

Re: The impact of competition and DeepSeek on Nvidia

#311

Post by lxgr » Mon, Jan 27, 2025, 7:19 PM UTC

rightbyte wrote: post #304

lxgr wrote: post #293

Earlier quoted context omitted.

The optimal amount of algorithmic trading is definitely more than none (I appreciate liquidity and price quality as much as the next guy), but arguably there's a case here that we've overshot a bit.

The price data I (we?) get is 15 minute delayed. I would guess most of the profiteering is from consumers not knowing the last transaction prices? I.e. an artificially created edge by the broker who then sells the API to clean their hands of the scam.

Real-time price data is indeed not free, but widely available even in retail brokerages. I've never seen a 15 minute delay in any US based trade, and I think I can even access level 2 data a limited number of times on most exchanges (not that it does me much good as a retail investor).

> I would guess most of the profiteering is from consumers not knowing the last transaction prices?

No, not at all. And I wouldn't even necessarily call it profiteering. Ironically, as a retail investor you even benefit from hedge funds and HFTs being a counterpart to your trades: You get on average better (and worst case as good) execution from PFOF.

Institutional investors (which include pension funds, insurances etc.) are a different story.

Re: The impact of competition and DeepSeek on Nvidia

#312

Post by nyrikki » Mon, Jan 27, 2025, 7:21 PM UTC

fairity wrote: post #270

bpt3 wrote: post #263

Earlier quoted context omitted.

Google's moat was significantly better results than the competition for about 2 decades. Your analogy is valid at this time, but proves the GP's point, not yours.

I think it's worth double clicking here. Why did Google have significantly better search results for a long time? 1) There was a data flywheel effect, wherein Google was able to improve search results by analyzing the vast amount of user activity on its site. 2) There were real economies of scale in managing the cost of data centers and servers 3) Their advertising business model benefited from network effects, where…

You are forgetting a bit, I worked in some of the large datacenters where both Google and Yahoo had cages.

1) Google copied the hotmail model of strapping commodity PC components to cheap boards and building software to deal with complexity.

2) Yahoo had a much larger cage, filled with very very expensive and large DEC machines, with one poor guy sitting in a desk in there almost full time rebooting the systems etc....I hope he has any hearing left today.

3) Just right before the .com crash, I was in a cage next to Google's racking dozens of brand new Netra T1s, which were pretty slow and expensive...that company I was working for died in the crash.

Look at Google's web page:

https://www.webdesignmuseum.org/gallery/google-1999

Compare that to Yahoo:

https://www.webdesignmuseum.org/gallery/yahoo-in-1999

Or the company they originaly tried to sell google to Excite:

https://www.webdesignmuseum.org/gallery/excite-2001

Google grew to be profitable because they controlled costs, invested in software vs service contracts and enterprise gear, had a simple non-intrusive text based ad model etc...

Most of what you mention above was well after that model focused on users and thrift allowed them to scale and is survivorship bias. Internal incentives that directed capitol expenditures to meet the mission vs protect peoples back was absolutely a related to their survival.

Even though it was a metasearch, my personal preference was SavvySearch until it was bought and killed or what ever that story way.

OpenAI is far more like Yahoo than Google.

Re: The impact of competition and DeepSeek on Nvidia

#313

Post by samvher » Mon, Jan 27, 2025, 7:23 PM UTC

UncleOxidant wrote: post #309

Even if DeepSeek has figured out how to do more (or at least as much) with less, doesn't the Jevons Paradox come into play? GPU sales would actually increase because even smaller companies would get the idea that they can compete in a space that only 6 months ago we assumed would be the realm of the large mega tech companies (the Metas, Googles, OpenAIs) since the small players couldn't afford to compete. Now that st…

My interpretation is that yes in the long haul, lower energy/hardware requirements might increase demand rather than decrease it. But right now, DeepSeek has demonstrated that the current bottleneck to progress is _not_ compute, which decreases the near term pressure on buying GPUs at any cost, which decreases NVIDIA's stock price.

Re: The impact of competition and DeepSeek on Nvidia

#314

Post by distances » Mon, Jan 27, 2025, 7:25 PM UTC

lxgr wrote: post #273

aurareturn wrote: post #233

Earlier quoted context omitted.

This is wrong. First mover advantage is strong. This is why OpenAI is much bigger than Mixtral despite what you said. First mover advantage acquired and keeps subscribers. No one really cares if you matched GPT4o one year later. OpenAI has had a full year to optimize the model, build tools around the model, and used the model to generate better data for their next generation foundational model.

> First mover advantage acquired and keeps subscribers. Does it? As a chat-based (Claude Pro, ChatGPT Plus etc.) user, LLMs have zero stickiness to me right now, and the APIs hardly can be called moats either.

If it's for mass consumer market then it does matter. Ask any non-technical person around you. High chance is that they know ChatGPT but can't name a single other AI model or service. Gemini, just a distant maybe. Claude, definitely not -- I'm positive I'm hard pressed to find anyone in my technical friends who knows about Claude.

Re: The impact of competition and DeepSeek on Nvidia

#315

Post by lxgr » Mon, Jan 27, 2025, 7:30 PM UTC

godelski wrote: post #301

lxgr wrote: post #275

The most important part for me is: > DeepSeek is a tiny Chinese company that reportedly has under 200 employees. The story goes that they started out as a quant trading hedge fund similar to TwoSigma or RenTec, but after Xi Jinping cracked down on that space, they used their math and engineering chops to pivot into AI research. I guess now we have the answer to the question that countless people have already asked: W…

Interestingly a lot of the math and physics people in the ML community are considered "grumpy researchers." A joke apparent with this starter pack[0]. From my personal experience (undergrad physics, worked as engineer, came to CS & ML because I liked the math), there's a lot of pushback. - I've been told that the math doesn't matter/you don't need math. - I've heard very prominent researchers say "fuck theorists" - I…

Is this in academia?

Arguably, the emergence of quant hedge funds and private AI research companies is at least as much a symptom of the dysfunctions of academia (and society's compensation of academics on dimensions monetary and beyond) as it is of the ability of Wall Street and Silicon Valley to treat former scientists better than that.

Re: The impact of competition and DeepSeek on Nvidia

#316

Post by ed » Mon, Jan 27, 2025, 7:30 PM UTC

dplgk wrote: post #250

aurareturn wrote: post #233

Earlier quoted context omitted.

This is wrong. First mover advantage is strong. This is why OpenAI is much bigger than Mixtral despite what you said. First mover advantage acquired and keeps subscribers. No one really cares if you matched GPT4o one year later. OpenAI has had a full year to optimize the model, build tools around the model, and used the model to generate better data for their next generation foundational model.

What is OpenAI's first-mover moat? I switched to Claude with absolutely no friction or moat-jumping.

One moat will eventually come in the form of personal knowledge about you - consider talking with a close friend of many years vs a stranger

Re: The impact of competition and DeepSeek on Nvidia

#317

Post by wtallis » Mon, Jan 27, 2025, 7:30 PM UTC

thijson wrote: post #292

vFunct wrote: post #264

Earlier quoted context omitted.

I worked on a network that used a protocol very similar to ATM (actually it was the first Iridium satellite network). An internet based on ATM would have been amazing. You’re basically guaranteeing a virtual switched circuit, instead of the packets we have today. The horror of packet switching is all the buffering it needs, since it doesn’t guarantee circuits. Bandwidth is one thing, but the real benefit is that ATM…

I remember my professor saying how the fixed packet size in ATM (53 bytes) was a committee compromise. North America wanted 64 bytes, Europe wanted 32 bytes. The committee chose around the midway point.

53 byte frames is what results in the exact compromise of 48 bytes for the payload size.

Re: The impact of competition and DeepSeek on Nvidia

#318

Post by lvass » Mon, Jan 27, 2025, 7:31 PM UTC

liuliu wrote: post #174

This is a humble and informed acrticle (comparing to others written by financial analysts the past a few days). But still have the flaw of over-estimating efficiency of deploying a 687B MoE model on commodity hardware (to use locally, cloud providers will do efficient batching and it is different): you cannot do that on any single Apple hardware (need to at least hook up 2 M2 Ultra). You can barely deploy that on des…

Is it really 37B different parameters for each token? Even with the "multi-token prediction system" that the article mentions?

Re: The impact of competition and DeepSeek on Nvidia

#319

Post by 9rx » Mon, Jan 27, 2025, 7:33 PM UTC

aurareturn wrote: post #261

pjdesno wrote: post #176

The description of DeepSeek reminds me of my experience in networking in the late 80s - early 90s. Back then a really big motivator for Asynchronous Transfer Mode (ATM) and fiber-to-the-home was the promise of video on demand, which was a huge market in comparison to the Internet of the day. Just about all the work in this area ignored the potential of advanced video coding algorithms, and assumed that broadcast TV-q…

Doesn’t your point about video compression tech support Nvidia’s bull case? Better video compression led to an explosion in video consumption on the Internet, leading to much more revenue for companies like Comcast, Google, T-Mobile, Verizon, etc. More efficient LLMs lead to much more AI usage. Nvidia, TSMC, etc will benefit.

Yes, over the long haul, probably. But as far as individual investors go they might not like that Nvidia.

Anyone currently invested is presumably in because they like the insanely high profit margin, and this is apt to quash that. There is now much less reason to give your first born to get your hands on their wares. Comcast, Google, T-Mobile, Verizon, etc., and especially those not named Google, have nothingburger margins in comparison.

If you are interested in what they can do with volume, then there is still a lot of potential. They may even be more profitable on that end than a margin play could ever hope for. But that interest is probably not from the same person who currently owns the stock, it being a change in territory, and there is apt to be a lot of instability as stock changes hands from the one group to the next.

Re: The impact of competition and DeepSeek on Nvidia

#320

Post by aurareturn » Mon, Jan 27, 2025, 7:34 PM UTC

fairity wrote: post #299

aurareturn wrote: post #291

Earlier quoted context omitted.

They have a ton of revenue and high gross margins. They burn billions because they need to keep training ever better models until the market slows and competition consolidates.

The counter argument is that they won't be able to sustain those gross margins when the market matures because they don't have an effective moat. In this world, R&D costs and gross margin/revenue are inextricably correlated.

When the market matures, there will be fewer competitors so they won’t need to sustain the level of investment.

The market always consolidates when it matures. Every time. The market always consolidates into 2-3 big players. Often a duopoly. OpenAI is trying to be one of the two or three companies left standing.