AI investors who sold after DeepSeek are missing something … the “war” with China … a shortsighted 7% Alphabet selloff … why altcoins are about to jump As you know, the sudden emergence of the low-cost, Chinese AI startup DeepSeek last week resulted in a flash crash in leading U.S. AI stocks. The selling pressure resulted from a kneejerk, fear-based interpretation: The AI buildout isn’t nearly as expensive as we thought. The tsunami of AI investment capital that we anticipated would flood the broader AI ecosystem will now only be a trickle. Throw away those bullish pro formas. This isn’t the megatrend we expected. In a recent Digest, we provided a counterargument: Lower-cost AI will result in more AI spending, not less, thanks to Jevons Paradox. You can revisit that Digest here. But there’s another critically important angle on DeepSeek’s debut. It’s a powerful reminder that investors cannot be so “right now” focused that we miss the forest for the trees. So, what “forest” is more important than DeepSeek’s game-changing, low-cost AI technology? Our “war” with China Yesterday morning, I received a text alongside a handful of InvestorPlace analysts sent by our CEO, Brian Hunt It contained a link to a video of Palantir’s Chief Technology Officer, Shyam Sankar speaking at a Palantir roundtable discussion. Here’s Sankar after being asked about DeepSeek (I’m abbreviating for space): One of the obvious lessons of DeepSeek are, one – something we’ve been saying for the last two years: The models are commoditizing. Yes, they’re getting better…but they’re also getting more similar, and the price of inference is dropping like a rock. But I think the real lesson, the more profound one, is that we are at war with China. We are in an AI arms race… This war started long ago. It was an economic war with the ascension of China to the World Trade Organization – the greatest IP theft in history, the greatest wealth transfer in history. It is an opium war. The number one cause of deaths of 18–45-year-olds is fentanyl…from China. It’s a diplomatic war. [China’s] Belt-and-Road initiative is basically indentured servitude for other countries to the CCP… China knows they’re at war… We kind of equivocate on it. Sankar called DeepSeek’s R1 model “exquisite.” And he noted that China is not purely stealing western innovations (though it is); it’s also creating its own profound AI advancements. Sankar then pulled no punches when he described today’s techno-political reality: We have to wake up with respect for our adversary, and realize that we are competing… We have to realize that the AI race is “winner take all.” And it’s going to be a “whole of nation” effort that extends beyond the [Department of Defense] in order for us, as a nation, to win… | Recommended Link | | | | Luke Lango here, I just alerted my followers to three new crypto trades with the help of my POWER 5 crypto algo… Trump could enact new crypto policies providing a rare window of opportunity to make more money in his first 100 days than his entire second term. The time to act is now. Click here now to watch the replay and get details on three new trades. |  | | DeepSeek’s emergence “should be a wake-up call” So said President Trump last week. In a recent meeting with Nvidia CEO Jensen Huang, Trump discussed the importance of strengthening U.S. technology and AI leadership. The President expressed concern about China's progress in AI development and the need for the U.S. to maintain its competitive edge. Back in January, Trump announced a $500 billion private sector investment to fund AI infrastructure known as the Stargate Project – a joint venture involving OpenAI, SoftBank, and Oracle, aiming to build data centers and create over 100,000 jobs in the United States. Here’s the quick take of our technology expert Luke Lango, editor of Innovation Investor: Needless to say, [Stargate] is a big deal. It could easily transform the U.S. tech industry over the coming years… and send certain AI stocks soaring over the next 12 months. And let’s not forget Trump’s signing of an Executive Order three days after his inauguration that eliminated certain AI policies from the Biden administration. The aim is to enhance America's global AI dominance. Finally, this week we’ve heard from some of the Mag 7 companies, and “slowing down the AI spend” isn’t on their radar. Yesterday, Alphabet announced plans to drop $75 billion on its AI initiatives…this year. Bottom line: Trump views the AI race through the same lens as Sankar…as a war. That means whatever it takes for the U.S. to win – or rather, however much it costs – Trump will support it. Fears of reduced AI spending are misguided. The trend to AI Agents Yesterday, Alphabet released Gemini 2.0, its “most capable” AI model yet. A CNBC article detailed aspects of the upgrade, but then pivoted to what I find more interesting: The continued releases are part of a broader strategy for Google of investing heavily into “AI agents” as the AI arms race heats up among tech giants and startups alike. Meta, Amazon, Microsoft, OpenAI and Anthropic are also moving toward agentic AI, or models that can complete complex multistep tasks on a user’s behalf, rather than a user having to walk them through every individual step. For more on these “agents,” let’s rewind to last year in AI Revolution (for newer Digest readers, this is a service featuring the top AI picks from our three experts, Louis Navellier, Eric Fry, and Luke Lango): The next big thing in AI is coming… and they’re calledAI agents. AI agents are “smart” AI applications that can perceive their environment and act accordingly… In short, AI agents extend what AI chatbots can do. They have the potential to be personal assistants… travel agents… educators… DJs… and will play thousands of other roles we haven’t yet dreamed of. To get a sense for what this really looks like practically speaking, let’s turn to none other than Bill Gates, creator of Microsoft. From Gates’ online blog, GatesNotes: Imagine that you want to plan a trip. A travel bot will identify hotels that fit your budget. An agent will know what time of year you’ll be traveling and, based on its knowledge about whether you always try a new destination or like to return to the same place repeatedly, it will be able to suggest locations. When asked, it will recommend things to do based on your interests and propensity for adventure, and it will book reservations at the types of restaurants you would enjoy… Agents won’t simply make recommendations; they’ll help you act on them. If you want to buy a camera, you’ll have your agent read all the reviews for you, summarize them, make a recommendation, and place an order for it once you’ve made a decision. If you tell your agent that you want to watch Star Wars, it will know whether you’re subscribed to the right streaming service, and if you aren’t, it will offer to sign you up. And if you don’t know what you’re in the mood for, it will make customized suggestions and then figure out how to play the movie or show you choose. By the way, to learn more about how to access the latest AI recommendations and analysis from Louis, Eric, and Luke in AI Revolution, click here. Their January issue did a deep dive into why Trump’s AI plans are driving their picks higher. Shortsighted Alphabet investors Returning to the concept of “missing the forest for the trees,” yesterday, in addition to announcing Gemini 2.0, Alphabet shares fell 7%. This happened after the company reported a fourth-quarter revenue miss and high capital expenditures plans (the $75 billion AI spend we highlighted earlier). So, here’s a question… As you consider… - Our “war” with China…
- The hundreds of billions (if not trillions) that will be spent to win this war…
- The coming evolution of “AI Agents” where Alphabet is a key leader…
- And whatever mind-blowing evolution of AI comes beyond that…
Does one quarter of slightly missed revenues seem like a wise, valid reason to sell your Alphabet shares? For me (I own Alphabet), it’s an easy “no.” Expect volatility. Expect frustrating pullbacks. But you and I have the good fortune of finding ourselves at the beginning of the mother of all technological, social, and economic megatrends. Invest accordingly. One final “forest and trees” dynamic As I write, Bitcoin is back under $100K. It’s trading at roughly $97,700, not far above a technical support level that, if broken, could result in a steeper correction. But investors focusing on this “tree” are missing the greater “forest.” Luke predicts Bitcoin will soon resume its march higher, hitting $120K without much resistance. And he sees our current crypto supercycle strengthening through 2025, with Bitcoin potentially hitting $200K by year-end (Luke accurately predicted Bitcoin hitting $100K last year, so we take his forecasts seriously). But it’s the smaller altcoins where Luke sees the greatest returns coming in 2025. In his Great American Crypto Project presentation this morning, Luke highlighted his belief that select altcoins could explode 100x in the coming months, driven by new White House policies. If you’re a crypto trader, or even considering sticking your toe in the water here, this morning’s presentation is a must-watch. Luke details the White House crypto policies I just referenced… he walks through how his team’s quant-based trading algorithm identifies a predictable bullish pattern before specific cryptos rack up its biggest gains… and he even reveals three specific crypto trades that he expects will soar in Trump’s first 100 days in office. You can catch it all here in this free replay of this morning’s Great American Crypto Project event. Yes, Bitcoin is down from its all-time high. But will you focus on this tree? Or the wider forest? History suggests there’s an obvious correct answer. We’ll keep you updated on all these stories here in the Digest. Have a good evening, Jeff Remsburg | 
No comments:
Post a Comment