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I have some big news that I want to cover on Nvidia stock and why I'm buying more Nvidia stock right now had a very interesting conversation with a Microsoft engineer who explained to me the impacts of deep seek and I had a lot of questions because I wanted to understand the long-term implications that deep seek has on the overall AI industry and the implications that it would have on Nvidia since we did see like half a trillion dollars lost in the market I sat down with one of my students and clients and I asked them how would this achieved and I want to give you a quick summary okay The quick summary of my interpretation is that they used open AI they used something called distillation process to get outputs build a cheap model and what the engineer told me was basically America is in a Sputnik moment just like the Soviet Union was and um America thought that they were ahead in space technology but in fact you know we had the Soviet Union in October 4 1957 launched the world's first artificial satellite so this is very important because I think that Innovation is going to increase and my takeaway from this conversation was that I think Nvidia is going to be a fantastic investment to make for the next 3 to 5 years I'm still going to keep this video short to the point but now let's go over my longer term analysis and what I learned from the engineer and the thoughts that I gathered myself so analysts worry about AI chip demand that it will peak in 2025 that will lead to slower Nvidia growth right because you know less companies will be demanding Nvidia chips however I think that's far from the truth and the fact is that Nvidia is only going to see more demand because right now we're in an AI race between us and China so when I look at the valuation of Nvidia which has a price to sales ratio of 30 times is actually very very reasonable and the valuation is far from being overvalued and I think right now we're fairly valued however what's going to come in the AI Revolution is going to give Nvidia a lot more money a lot more Revenue a lot more profits and I think this stock is going to be worth $200 plus dollars you know at the end of 2025 going into 2026 which I think is a really good opportunity for buying leap options for covered calls for selling puts I would specifically sell puts at a 30 Delta I would also do covered calls at a 30 Delta you know for me every time Nvidia has earnings I think the CEO will come in with more insights more Innovation and at then the day we only have one game in town we have Nvidia because they're supplying the entire AI industry yes there's other companies yes there's some competitors but the valuation on Nvidia and the market opportunity is really massive so when I was sitting down and trying to understand and inform a better decision to make on Nvidia and what do I do with my shares because I have a lot of shares I've decided that I'm only going to be buying more hand over fist as you guys already know my saying so I think that you know I was talking to the subject matter expert who was working at Microsoft he has a lot of experience he's a friend and client subject matter expert actually in the AI space so when I try to understand like what does this mean for NVIDIA what is deep seeking what is China copying really do for the US well it actually Spurs a very interesting question which is who's going to win the AI race and where to invest like where do I invest to have a long-term competitive Advantage how do I continue to grow my portfolio my client's portfolio so again my conclusion is to Simply continue to buy Nvidia and not to be concerned about competitors and the AI race itself because at the end of the day right China deep seek was using Nvidia chips older or newer it doesn't really matter and I looked at history because history does repeat itself and when you're investing you want to understand you know what does history have to do with the future and actually has a lot to do with it so a Sputnik moment which I was discussing was basically when you know America thought that they were head in the space technology race but the Soviet Union launched Sputnik won the world's first artificial satellite by Soviet Union October 4th 1957 and my parents are from Soviet Union this actually creat a whole arms race between America because America got slapped in the face with some like pancakes heavy syrup on them with a lot of butter and the US started to have a sense of urgency and you can see how I'm trying to foreshadow here that the same thing is going on right now with deep seek and China you can see a lot of companies are copying this model so deeps R1 used AI distillation which is leveraging larger models like gp4 and llama to train a smaller more efficient model the way it works is instead of storing vast knowledge it mimics responses of larger models using a student teacher approach uses multiple AI sources to provide diverse perspectives improving adaptability and robustness and it can also run on consumer grade Hardware making AI more accessible this is a very big net benefit and it means that AI is going to be more important in the economy and Nvidia is going to be a huge component of that smaller models Risk by the way hallucinations which was explained to me basically when a model is very confident but has incorrect answers and it has inherent biases from their TR models so I personally wouldn't use deep seek myself but the broader implications that I took out of this because it's very important for me to understand do I keep holding Nvidia stock or do I cut it I'm trying to find research on The Cutting Edge I want to find research from Insider you know not calling it Insider information but I wanted to find good reasons to continue to hold so the broader implications here is that is that deep seek will democratize AI by lowering entry barriers affecting large AI companies pricing models and it may also reduce Reliance on cloud-based AI and threaten us AI firms business models you'll see that open AI you know they have a paid plan but now deep seek has open source so anyone can go in and start like you know playing around and more companies will do that because they can now build models for a lot cheaper this is overall a net benefit Because deep seek R1 may be efficient but training large AI models still requires massive computing power which means demand for nvidia's h100 and future b00 AI gpus will remain really strong and high so overall with nvidia's business I'm going to say say we're going to see a lot of strong demand in 2025 and this is easily a $200 stock so deep seek R1 doesn't change the demand for gpus if anything it only increases it so AI is just one of many nvidia's growth sectors as well because I wanted to point this out and I was talking to the engineer I was curious like you know what else does he see that Nvidia will really like dominate and get a lot more Revenue because obviously Nvidia is not a cheap stock and for it to go up to a 5 trillion valuation and be worth five trillion which is you know where I want it to go and where I think it'll go because have a lot of money in it I wanted to understand what else is important and there was three main components so the first one is Data Centers data centers are going to bring Nvidia a lot of cash flow second place is gaming gpus so still the gold standard for gaming professional Vis visualization and crypto applications so gaming gpus is actually one of the fastest growing parts of nvidia's GPU demand and gaming is a really big economic motive for NVIDIA as well and gaming is going to be a really huge profit pool for NVIDIA the third one is automotive and Robotics this is something that's really interesting because we saw that Elon Musk said that robots are going to be a huge opportunity for Tesla along with FSD that's what's going to make Tesla potentially more valuable than the you know five next biggest companies like Google and and apple and the rest Nvidia is pushing into AI powered self-driving and Industrial Automation so those are the three areas of opportunity for NVIDIA and another those are the three reasons I'm going to hold it now autonomous driving in Tesla specific FSD will be adopted by the whole Market most likely and that will happen in 2027 2028 according to Elon Musk predictions Elon Musk claims and I do think it's also reasonable for us to expect that in the next 2 to three years and you want to be early on that right so you can buy Nvidia later when FSD comes into fruition because that is a risk there's no guarantee that's going to happen just like there's no guarantees in anything but I would still hold Nvidia and be early here because for me being early is NVIDIA under $150 per share so if it's under 150 I would sell puts with like as much money as I have up to 25% of my net worth right that's pretty much how much I have in Nvidia thereabouts and that's what I think is reasonable for a growth investor looking for the highest amount of growth like Nvidia is the best game in town it has high implied volatility which makes the options really good so selling 30 Delta puts 30 Delta covered calls on on automatic mode is the way to just gather up a lot of Juicy premium and to have exposure into the best one of the best stocks Nvidia so collapse and cost Innovation also makes me super excited so AI training costs drop 75% per year According to some resources and the conversation that I had with um an AI researcher was essentially that as cost droppings continue at 75% it's essentially exponential cost reduction just like sequencing a genome this is going to lead to massive in inovations and there's actually more AI demand than we can even predict right now because this is the fastest growing Trend there's going to be companies that we're not even aware of because they may have not started yet or maybe they're very early in starting which is going to have a lot of GPU demand so it's not just the big hyperscalers in town that need that it's going to be a lot more so for me the areas that I was having a discussion with I spent a couple hours on a zoom call was Robo taxis Tesla we discussed that Robo taxis are going to be huge because it makes a lot of economic sense and economically like why would you grab a taxi when you know with a person in it when it's half the cost to grab a taxi with a Tesla with no driver right Healthcare we're going to see a reduction in sequencing and that's going to be also really amazing Gene editing longer lives and healthier lives that's going to be a big component where AI is also going to dominate there's going to be companies that are going to be popping up because Healthcare is a huge industry and there's going to be GPU demand and Nvidia is fueling that so again another Catalyst there another opportunity and one of the biggest opportunities is also productivity gains for knowledge workers so I think everyone wants workers to be more productive and obviously AI will replace a lot of jobs but it's a net benefit to knowledge workers so you know knowledge workers are professionals who rely on thinking problem solving communication rather than manual labor they're seeing huge productivity boost thanks to AI advancements like DC car1 and GPT based models so I'm super bullish on Nvidia and this was an Nvidia update with my research hopefully you enjoyed this leave a like leave a subscribe and I'll catch you guys in the next one
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