DeepSeek Diving: Exploring the Great Unknown
Welcome to the Schmoozeletter Blog. Your source for weekly water cooler wisecracks from the world of finance. If you have an opinion different than mine or a topic you want to hear about, let me know!
This week, Federal Reserve Chair Powell and the gang kept interest rates the same, which was what everyone expected. Mr. Market basically stayed in line as there was no surprise up or down.
There are always fireworks in the Q&A after the announcement, with the blood-sucking journalists looking for a juicy political soundbite to get their clicks.
Daddy Powell is the absolute king of not taking political stances. Right off the bat, the FIRST question was basically:
“Hey, Trump says you’re a moron, and he wants interest rates down.”
With a smirk and a sigh, the artful dodger hit him with the blandest, “I’m not going to comment. We will just do what we always do… blah blah blah.”
A couple of questions later came: “Hey, aren’t these tariffs going to make the economy implode?”
Like Neo ducking bullets, Powell said we need to watch and wait, no different than we do with any other administration… blah blah blah.
Next up was a long-winded setup to get him to comment on the executive order on repealing Diversity, Equity, and Inclusion.
“We just do our job consistent with applicable law.”
Oh, a follow-up?
Another “consistent with applicable law” right in your face, bitch!
You wanna ask again? He’s got a whole bag of “consistent with applicable laws” down there with your name on it.
I am obviously paraphrasing these questions, but this one is an exact quote: “Elon Musk says the Fed is absurdly overstaffed.”
Going to take the bait on Elon?
“We run a very careful budget process... We owe that to the public… No further comment.” Missed again, scoundrel.
How about an onslaught of tariff fastballs that have already been asked six times?
“I want to avoid comment even indirectly… It is just not our job.”
Ricky Vaughn’s arm up in here. You think you’re getting one over on this guy?
Think again.
He closed by stressing that we have a good labor market, the economy is growing, and inflation is down to 2.6%. He said it is a “very good economy right now.”
So, despite what your crazy uncle says or what a certain political party spent tens of billions of dollars drilling into your head this past fall, the numbers are the numbers. It is a very good economy right now.
Speaking of politics, did you think you could go one week without President-Sell-You-Shit finding a new way to make a buck off the American people? Guess again. Introducing Truth.Fi.
This is through Donny's publicly traded company with the stock ticker DJT. We don't have their fourth-quarter financials yet, but here are the operations of DJT through the first nine months of last year.
Wow, those are certainly the fiscal geniuses I want to buy investment vehicles from!
But the most market-moving news of the week is the new AI model from a Chinese start-up company, DeepSeek. So, let’s go:
DeepSeek Diving: Exploring the Great Unknown
What is DeepSeek?
DeepSeek is a Chinese version of ChatGPT. It is an AI language model that people are saying is as good as ChatGPT. In fact, some are saying it is ChatGPT.
What did it cost to make?
Six million?
Six million?!
Tony Stark was able to build this in a cave! With a box of scraps!
To put into perspective how ridiculous (and incredibly untrue) the $6M figure is, let’s take a look at what the other big boys are doing.
Zuckerberg says META is going to spend between $60B-$65B on AI in 2025.
Microsoft, MSFT, is shelling out $80B.
Trump announced Project Stargate, which is $500B for AI infrastructure.
Those are B’s—as in billions. Like 1,000 millions. Not 6.
How did the market react?
Everyone was totally cool about it. Just kidding.
When this seemingly insanely cheaper version hit number one in the Apple App Store over the weekend, we got a good old Monday selling frenzy.
Chip king NVDA closed Monday down 17%. Other semiconductor companies like AVGO and TSM were down 17% and 13%.
AI-model-haver GOOG closed down 4%, and ChatGPT parent company’s partner in crime, MSFT, was down 2%.
All the big tech bulls took to the “please don’t sell my favorite stock” network, CNBC, to say how it was actually a good thing for tech that ChatGPT could be copied and released for free so easily.
One tech stock that rose on the news was AAPL, which closed up 3% on the day. Investors seemingly remembered that Apple doesn’t care who makes the apps—they go through the App Store either way.
So are we all doomed?
Yes.
Really?
No.
It has since come out that DeepSeek actually cost north of a billion, was only compared to older versions of GPTs, and doesn’t even have hydrothermal vents.
It does leave a lot more questions than answers, though.
How dominant is Team US really in this artificial intelligence cold war with China?
Who is really going to benefit from the massive American AI spending?
If billions are being shelled out for AI infrastructure, how long will it last?
Isn’t a new, more advanced chip or GPU or whatchamahoozit going to be needed in five years? Or three?
A lot to ponder when exploring the great unknown of the DeepSeek blue.
So, any buying opportunities from the sell-off?
Absolutely!
AI is here to stay, and the big dogs are spending like crazy. There’s the old saying: “In a gold rush, sell shovels.”
My top shovel company for the value and the business model is ASML.
If AI is gold and chips are shovels, then ASML is like the special shovel handle mold maker company used by all of Big Shovel… Alright, we’re losing the analogy.
They basically have a monopoly on the “patterning” portion of advanced chip-making, so their machines are used by NVDA, TSM, and all the key chip makers.
They just reported a great fourth quarter with a huge bookings number.
And after a sell-off in price from DeepSeek fishing and a flat 2024, they are expected to grow earnings in the 20% range for years to come.
When you buy a company for its fundamentals, you don’t need to worry about waking up and needing to panic-sell because your TubOfLardEmuCoin fell 50% since China dropped its superior PlumpSnowGooseToken over the weekend.
Final Thought
“Be fearful when others are greedy, and be greedy only when others are fearful.” —Warren Buffett
