The Drill: The commoditization of AI is here

Let’s start with DeepSeek. The trajectory toward singularity may be accelerating faster than previously forecasted. With barriers to entry for AI development rapidly lowering and efficiency gains fueling greater demand rather than less, it seems inevitable that this trend will reshape the AI landscape.
A compelling case can be made that Microsoft and Alphabet will soon need to reevaluate their GPU purchasing strategies to keep pace with these changes. This spells a challenging near-term outlook for NVIDIA, whose dominance in the GPU market could face headwinds.
First and foremost, DeepSeek is an extraordinary achievement. The fact that such a small team operating on a lean budget could create something this impactful highlights the inefficiency and bloat that exists in larger organizations like Meta—and, to some extent, OpenAI. What makes this even more remarkable is that DeepSeek’s approach is open-sourced, allowing other players to adopt their methodology, refine it, and test it with far greater resources. This dynamic is undeniably bullish for innovation in the AI sector.
At the moment, DeepSeek is not necessarily “better” than its competitors in terms of raw performance, but its cost efficiency is unparalleled. In an industry where switching costs between models are minimal, particularly at the corporate level, the value proposition of saving 95% in costs is impossible to ignore. Brand loyalty in this space is often overestimated, and DeepSeek’s efficiency gives it a significant competitive advantage.
Our Thoughts on DeepSeek and the Commoditization of AI/GPUs, Plus Trump/Energy and Europe: Is This the Most Bullish Event in Years or a Problem for Nasdaq and NVIDIA? Let’s take a closer look.
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