It was the shot heard around the world.
China’s DeepSeek rocked the tech industry and the stock market in late January by releasing an AI model comparable to OpenAI o1 that was built at a fraction of its cost.
To be fair, the initial numbers bandied about in the mainstream media weren’t totally accurate.
Instead of costing a mere $5.6 million to train, by some estimates the total cost of training DeepSeek was closer to $1.6 billion.
That’s a pretty wide gap, as I suspected early on. Still, DeepSeek R1 is an impressive feat of technology.
In the days that followed its release, we talked about how the Jevons Paradox tells us that when something becomes more efficient and uses less resources, people often end up using more of it, not less.
That means we should see an increase in AI usage.
And we can also expect that — even with more efficient AI models — this should lead to more energy use overall, not less.
But so far, we’ve barely touched on how American companies might respond to DeepSeek with new innovations of their own.
Let’s do that today because it ties into my upcoming special broadcast on March 17.
The Reinvention of Nvidia
Specifically, I want to talk about Nvidia.
As I’m sure you remember, Nvidia was hit especially hard by the release of DeepSeek.
Its stock plummeted the following Monday…
And the company shed nearly $600 billion from its market cap.
It was the biggest one-day loss in market history.
When you understand Nvidia’s business model, it’s easy to see how this happened.
Right now, Nvidia depends heavily on the growth of AI spending. In fact, 88% of its revenue ($30.8 billion) comes from its data center business.
In other words, Nvidia’s whole business relies on a continued AI buildout.
At the same time, major AI clients like OpenAI are developing their own custom chips, reducing their reliance on Nvidia’s hardware.
That might sound dire for the future of Nvidia. But here’s the thing…
Nvidia isn’t new to reinvention.
The company’s CEO, Jensen Huang, thrives on it. In fact, Nvidia’s ability to pivot on a dime is what helped make it the world’s biggest company.
Only three years ago, in fiscal 2022, its gaming segment, which includes chips for video games and crypto mining, made up 46% of the company’s sales ($12.46 billion).
Today, revenue from the gaming segment has dropped to just 9.4%.
Because once ChatGPT made everyone realize that artificial intelligence was a force to be reckoned with, Huang pivoted the company to AI.
And with the launch of DeepSeek, I predict another pivot is about to happen.
Huang hinted at this in Nvidia’s recent earnings call when he said: “We’ve really only tapped consumer AI and search and some amount of consumer generative AI… the next wave is coming.”
You see, Nvidia’s strength lies in its GPUs, which are incredibly versatile.
Even if demand for the first iteration of AI slows, Nvidia’s technology will likely find new uses.
And over the next decade, robotics and autonomous vehicles could be the next areas where the company cashes in with their current GPUs.
But I believe Huang has something even bigger planned for Nvidia’s future.
In fact, my team and I have spent the last several months investigating what the company might be up to next…
And what we’ve uncovered is nothing short of remarkable.
It appears that Nvidia has been working behind the scenes with Google on a new AI breakthrough.
And we could hear all about it in a major “Next-Gen AI” announcement that Nvidia is set to make on March 20.
What is this major AI breakthrough?
I believe they’re about to announce a next-generation AI chip that could completely change the trajectory of artificial intelligence.
I call it the Q-chip.
And just like when ChatGPT ignited the AI boom in 2022…
I believe Nvidia’s potential Q-chip announcement on March 20 could be the catalyst that sends AI stocks soaring again.
That’s why I’m going live with a special broadcast this coming Monday, March 17 to break down the best way you could profit from this announcement.
Here’s My Take
Before you start gobbling up shares of Nvidia and Google, I want to make something perfectly clear…
I don’t believe the best way to take advantage of this breakthrough is by buying either company’s stock.
After all, they’re already trillion-dollar companies.
Sure, these stocks could go higher. If Huang announces what I believe he’ll announce, they probably will.
But it’ll take some time.
Instead, I’ve identified a much smaller stock that could be positioned for an even bigger move.
The company I’ve identified is working behind the scenes to help bring this next-gen AI chip to life. Yet it’s flying completely under Wall Street’s radar today.
In fact, it’s roughly 1/1000th the size of Nvidia. That means its stock has a LOT more room to run.
If you’re interested in finding out more, simply click here to reserve your spot for my upcoming special broadcast on March 17.
That’s only three days before Nvidia’s big event…
So click here now to reserve your spot today!
Regards,
Ian KingChief Strategist, Banyan Hill Publishing
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