It’s the End of AI as We Know it??

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It’s the end of AI and I know it and I feel fine. Yeah, we’re fine. No worries. Why do we have no worries? Well, we’ll explain. Anyway, first and foremost, let’s go through what has been happening because this has been lingering out there for some time. China has this DeepSeek, deep seek, the bunch of these smart Chinese people put together this.

this AI app that well, it doesn’t cost that much. They’re claiming that they didn’t need any really brand new fancy pants, Nvidia chips. They did it for the low, low costs of some like $6 million. Again, OpenAI has been working on this stuff for over 10 years. All sorts of stuff. Mark Anderson, who is

Again, Anderson Horowitz, he’s big venture capital guys, Trump’s right-hand man when it comes to AI says that this is China’s Sputnik moment, the collective freak out everywhere, chip stocks dropping like crazy. Now, why do you think that is? Okay, again, most people don’t realize the amount of spend that’s actually involved with this AI, it’s massive. And that’s why Nvidia has been

to the moon for a very long period of time. Now, if everything that they’re saying is true, most certainly would change the dynamic. No doubt about it at all. Why is this a good thing? Well, first and foremost, this is the natural ebb and flow of technology. Remember what it used to cost for storage, what it used to cost for chips.

what it used to cost for televisions, PCs, whatever it may be. Technology and productivity drive these costs down. Now, collectively, you’ve seen the NASDAQ sell off across the board. Everything seems to be going down. how is this going to affect the Mag-7? Well, if you are a company that needs these Nvidia chips or used to need these Nvidia chips, this is actually a good thing for you.

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Your costs of developing AI platforms for whatever, know, Amazon, Grok for, you know, Tesla and X and all these other companies, your costs have come way down. You’re not going to have to spend as much money. The dynamic has changed. If everything plays out the way it plays out. We don’t know. Elon Musk.

And Alexander Wang suggested that this DeepSeq has about 50,000 Nvidia Hopper GPUs, not the 10,000 A100s they claim. And again, China’s able to get the, I don’t get export controls, but they’re able to get these things from a myriad of different ways. I’m sure. I’m sure they can get them through Taiwan or some other places in some way, shape, or form. With that being said.

Put all of this aside. Am I getting quite a few worried emails, emails from people that listen to this podcast in this program whining? know, I reminded like Johnny Fontaine in Godfather 1, I don’t know what to do, Godfather. I don’t know what to do. And again, I want to smack him upside the head.

you could open up an account here maybe, and you wouldn’t have this problem. Yeah. Yeah. To everybody out there that, thought that, yeah, chips were just going to go up forever in 10 days and never decided to take a profit. And we’re nothing but long, massive amounts of semiconductors without trimming positions and doing what we’ve been telling you to do here on this program. I don’t know what to tell you, man.

But we’ve been explaining this for a very long time here on this show. Don’t do stupid stuff with your portfolio.

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Nvidia, you see how well it’s been? Yeah, it’s done great. Many companies throughout the ages have done great until they no longer do great. This is just the nature of the industry. Blue chips, and you’d say Nvidia is pretty much a tech blue chip, blue chips can die. Now, I don’t think Nvidia is going to die. don’t think Nvidia is going anywhere. But the dynamic most certainly can change.

And again, there’s a lot of younger investors out there that are so smart. They know so much more than we do over here. Again, I went through the dot com. I’m not even talking about the dot com collapse companies that weren’t making any money. But many of the companies that were involved in building out infrastructure, telecom, late 1990s, early 2000s, take a look at a Cisco chart.

That company, it’s still around. It came down and it took a long, long, long, long time for it to do a damn thing. And that’s the reality, even though don’t, Nvidia’s not going anywhere. But if things play out the way that they are, obviously it’s going to have a different multiple.

One of the things we’ve been trying to teach everybody here on the program with all of the great successes that you can have in certain positions in your portfolio is to understand that you need to trim positions. You need to take money off the table and reallocate assets. Do I still own Nvidia? Yeah, we still own Nvidia.

Yeah, absolutely. But we’ve been selling it along the way. The positions that we own are way up. And they’re still way up despite today’s sell off. Are we thinking we’re going to kind of see how things play out and how we’re going to go about maybe trimming these positions to a greater degree? Absolutely. But when I wake up on a Monday morning or I obviously knew about this earlier what was going to happen this Monday morning over the course of the weekend.

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Okay, no big deal.

But for people all of a sudden, holy crap, I got margin calls. I know what to do. My whole portfolio is down. I got Broadcom. I’ve got Nvidia. I’ve got all this stuff. Come on. You you can’t let risk lead to ruin. When I talk about blue chips dying, I wrote about this back in 2007. I’ve talked about this here on the program. I actually started off a column.

Again, this is 2007, predicting Walmart and General Electric will no longer exist. Now again, this is before General Electric really imploded. But Walmart, how could I see such a thing? eventually, know, everything plays out, companies go under. And I talked about the first company that issued stock, the Dutch East India Company in 1602.

For 200 years, that company paid an 18 % dividend. That kicks ass. I that’s awesome. It’s no longer.

It’s a concept that we often talk about. It’s called creative destruction. Again, don’t want to harp on this, but people, you never go poor taking profits. You think you’re so smart. You think you’re smarter than, you know, everyone has been doing this for decades, that you’re able to figure out when the bottom is or the exact top is. Okay.

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Okay, you’re gonna get hammered. Eventually you’re going to get hammered. think quite frankly, at this point in time, I’m following this, because I find it fascinating, and what’s gonna happen next. But there’s still a lot out there that nobody really knows.

Nobody really knows. But let’s say a week from now, let’s say we trim positions in our portfolios further based upon the risk that’s involved right now. And the whole thing is a big fugazi and a stock rockets up again.

Am I gonna play Monday morning quarterback? No. No. Again, it was way risk, way reward. Move on. Still made a fortune. What difference does it make? One funny note before we go. This is an actual Jim Cramer tweet from last week.

Nvidia stock, which has been roughly flat since June of last year, could be breaking out if there’s so much enthusiasm what we know would happen in the data center world, what we talked about last night on mad money. Again, it’s amazing. The guy, it’s like, it’s unbelievable. He’s like George from Seinfeld. He should just say the exact opposite of what he’s thinking. Anyway, watchdog on wallstreet.com.