Dear Reader,
Today I want to talk about DeepSeek.
Wow.
Holy mackerel…
Talk about the tech sector getting hammered!
===
4x Better Than Bitcoin
Bitcoin would have to go from $100,000 to $463,000 to match the 463% gains we saw with Immunogen…
It would have to go to $300,000 to match the 300% gains we saw with Viking Therapeutics.
And an upcoming FDA decision could spark a 2,400% sales surge for this tiny $4 stock.
Get the name of the stock here >>>
===
And for very, very good reason.
For those of you who don’t know yet, DeepSeek, a Chinese company, came out with an AI model that seems to be better in a lot of ways than OpenAI or Google’s Genesis or any of these other AIs.
Which, okay, great – so they have their AI model.
But what’s really shocking about this is that it cost about $6 million to build.
Secondly, it didn’t use NVIDIA’s most advanced chips.
This raises a lot of issues.
And a lot of troubling questions.
I mean, trillions of dollars’ worth of troubling questions.
First of all, on a national security level.
Let me just tick these off one at a time. I wrote some notes here:
If the U.S. was ahead on AI and our whole policy was block them from getting Nvidia’s most-advanced chips…
Then from a national security perspective, this is a problem.
We don’t have the lead we thought we did.
It seems they are right there with us.
So, that’s number-one.
The Trump and Biden administrations’ efforts to block China from getting advanced chips clearly didn’t help our national security if this company is using old Nvidia chips to create a better AI.
So, now what?
The chips they’re using are like five generations old – if we block AI chips five generations deep from everyone but our allies, Nvidia as a company will be demolished.
Secondly, we’ve seen Nvidia telling everyone, “you need these new chips!”
Well, now everyone can clearly see, maybe we don’t need to spend all this money on Nvidia’s new chips – old chips are obviously doing a fine job.
That’s not good for Nvidia at all!
Everyone paying these exorbitant prices is now looking around saying, wait a minute…
And the other thing this means is that ChatGPT, Perplexity, any of these AI companies – don’t have a moat.
Silicon Valley investors have been working under an assumption it would take $100 billion to create ChatGPT, and a gazillion dollars to train it…
But then a guy from China goes and does it for $6 million?
I mean, that just shows you anybody could do it, basically.
So why would you as an investor invest in another AI company at a $100 billion, $200 billion valuation…
When some kid (not kid, but young man from China) can do this for $6 million?
It basically shows you your business model doesn’t have a moat around it.
If a kid in a basement can basically do this…
ChatGPT’s in trouble…
Google’s AI’s in trouble…
All these AI companies we’re hearing about are in trouble.
This is “canary in the coal mine” kind of stuff for the markets.
It’s kind of funny…
You hear about Ted Bundy – this lunatic – never caught for killing anyone; they caught him for driving with a broken taillight.
So this feels like the “broken taillight” for the market.
It’s forcing investors to ask themselves…
“Wait a minute – are all our assumptions about AI and spending and all of this – wrong?
“What does it mean that you can use old Nvidia chips?
“What does it mean that you can train an AI for $6 million?”
The answers to these questions are very likely to send the market lower.
People are not going to be happy with the answers.
So that’s my message for today…
This is a canary in the coal mine.
You can see the market’s getting hammered for this.
Because this market has been an AI trade.
And if the fundamental assumption about the AI trade was that you need good Nvidia chips, and that these large language models like ChatGPT have a wide moat, if that whole assumption just got – BOOM – blown to pieces…
What does that mean for the market?
Canary in the coal mine.
Fortunately, we have a playbook for a market teetering on the brink of collapse.
In my Midnight in America book I show you, step-by-step the actions to take before, during, and after a market crash…
Not just to save your nest egg but to actually seriously accelerate your wealth through market crashes…
Which is frankly how I’ve made most of my personal fortune.
You can pick up your copy here.
See you tomorrow.
“The Buck Stops Here,”
P.S. One sector that hasn’t participated in this AI-fueled mania, yet is one of the biggest beneficiaries of AI advances, is biotech.
Biotech has been in a bear market…
But with Trump in office, that is starting to change, as we’ve talked about with all the takeover action we see coming for Big Pharma.
We use a little-known “glitch” that allows us to pinpoint the precise dates of huge stock moves weeks in advance.
