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The impact of competition and DeepSeek on Nvidia

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Re: The impact of competition and DeepSeek on Nvidia

#391

Post by ransom1538 »

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.

I moved 100% over to deepseek. No switch cost. Zero.

Re: The impact of competition and DeepSeek on Nvidia

#392

Post by aurareturn »

yifanl wrote: post #388
aurareturn wrote: post #382

Earlier quoted context omitted.

The usage of existing but cheaper nvidia chips to make models of similar quality is the main takeaway. So why not buy a more expensive Nvidia chip to run a better model?

Is there still evidence that more compute = better model?

Yes. Plenty of evidence.

The DeepSeek R1 model people are freaking out about, runs better with more compute because it's a chain of thoughts model.

Re: The impact of competition and DeepSeek on Nvidia

#393

Post by aurareturn »

mandevil wrote: post #336
aurareturn wrote: post #261

Earlier quoted context omitted.

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.

It lead to more revenue for the industry as a whole. But not necessarily for the individual companies that bubbled the hardest: Cisco stock is still to this day lower than it was at peak in 2000, to point to a significant company that sold actual physical infra products necessary for the internet and still around and profitable to this day. (Some companies that bubbled did quite well, AMZN is like 75x from where it w…

>It lead to more revenue for the industry as a whole. But not necessarily for the individual companies that bubbled the hardest: Cisco stock is still to this day lower than it was at peak in 2000, to point to a significant company that sold actual physical infra products necessary for the internet and still around and profitable to this day. (Some companies that bubbled did quite well, AMZN is like 75x from where it was in 2000. But that's a totally different company that captured an enormous amount of value from AWS that was not visible to the market in 2000, so it makes sense.)

Cisco in 1994: $3.

Cisco after dotcom bubble: $13.

So is Nvidia's stock price closer to 1994 or 2001?

Re: The impact of competition and DeepSeek on Nvidia

#394

Post by aurareturn »

fspeech wrote: post #343
aurareturn wrote: post #261

Earlier quoted context omitted.

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.

If you normalize Nvidia's gross margin and take into account of competitors sure. But its current high margin is driven by Big Tech FOMO. Do keep in mind that 90% margin or 10x cost to 50% margin or 2x cost is a 5x price reduction.

So why would DeepSeek decrease FOMO? It should increase it if anything.

Re: The impact of competition and DeepSeek on Nvidia

#395

Post by tempeler »

First of all, I don't invest in Nvidia and like Olygopols. But it is too early to talk about Nvidia's future. People are just betting and wishing about Nvidia's future. No one knows people's what people will do in the future. what they will think? It's just guessing and betting. Their real competitor is not Deepseek. Did AMD or others release something new and compete with Nvidia's products? If NVDIA will be the market leader, this means they will lead the price. Being Olygopol is something like that. They don't need to compete for the price of competitors.

Re: The impact of competition and DeepSeek on Nvidia

#396

Post by vFunct »

lxgr wrote: post #271
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…

> You’re basically guaranteeing a virtual switched circuit Which means you need state (and the overhead that goes with it) for each connection within the network . That's horribly inefficient, and precisely the reason packet-switching won. > An internet based on ATM would have been amazing. No, we'd most likely be paying by the socket connection (as somebody has to pay for that state keeping overhead), which sounds h…

The cost for interactive video would be a requirement of 10x bandwidth, basically to cover idle time. Not efficient but not impossible, and definitely wouldn’t change ISP business models.

The latency benefit would outweigh the cost. Just absolutely instant video interaction.

Re: The impact of competition and DeepSeek on Nvidia

#397

Post by tedunangst »

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…

Selling 100 chips for $1 profit is less profitable than selling 20 chips for $10 profit.

Re: The impact of competition and DeepSeek on Nvidia

#398

Post by Vegenoid »

munksbeer wrote: post #347
onlyrealcuzzo wrote: post #331

Earlier quoted context omitted.

No - because this eliminates entirely or shifts the majority of work from GPU to CPU - and Nvidia does not sell CPUs. If the AI market gets 10x bigger, and GPU work gets 50% smaller (which is still 5x larger than today) - but Nvidia is priced on 40% growth for the next ten years (28x larger) - there is a price mismatch. It is theoretically possible for a massive reduction in GPU usage or shift from GPU to CPU to bene…

I can see close to zero possibility that the majority of the work will be shifted to the CPU. Anything a CPU can do can just be done better with specialised GPU hardware.

Then why do we have powerful CPUs instead of a bunch of specialized hardware? It's because the value of a CPU is in its versatility and ubiquity. If a CPU can do a thing good enough, then most programs/computers will do that thing on a CPU instead of having the increased complexity and cost of a GPU, even if a GPU would do it better.

Re: The impact of competition and DeepSeek on Nvidia

#399

Post by wtcactus »

To me, this seems like we are back again in 1953 and a company just announced they are now capable of building one of IBM's 5 computers for 10% of the price.

I really don't understand the rationale of "We can now train GPT 4o for 10% the price, so that will bring demand for GPUs down.". If I can train GPT 4o for 10% the price, and I have a budget of 1B USD, that means I'm now going to use the same budget and train my model for 10x as long (or 10x bigger).

At the same time, a lot of small players that couldn't properly train a model before, because the starting point was simply out of their reach, will now be able to purchase equipment that's capable of something of note, and they will buy even more GPUs.

P.S. Yes, I know that the original quote "I think there is a world market for maybe five computers", was taken out of context.

P.S.S. In this rationale, I'm also operating under the assumption that Deepseek numbers are real. Which, given the track record of Chinese companies, is probably not true.

Re: The impact of competition and DeepSeek on Nvidia

#400

Post by Vegenoid »

aurareturn wrote: post #394
fspeech wrote: post #343

Earlier quoted context omitted.

If you normalize Nvidia's gross margin and take into account of competitors sure. But its current high margin is driven by Big Tech FOMO. Do keep in mind that 90% margin or 10x cost to 50% margin or 2x cost is a 5x price reduction.

So why would DeepSeek decrease FOMO? It should increase it if anything.

Because DeepSeek demonstrates that loads of compute isn't necessary for high-performing models, and so we won't need as much and as powerful of hardware as was previously thought, which is what Nivida's valuation is based on?
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