Is DeepSeek the needle that pins the bubble? 📌

A thought experiment, but with practical applications.

I wrote my first piece under the AI theme with Downside at NVDA one year and one day ago. In it I touched upon the complicated relationships in the upper echelons of the Semis/AI world — and explained how they could be creating a “false” reality.

We will try to stay away from too much philosophical talk in this piece and rather shoot for operational success, that’s what Papa Soros would advocate!

A month later I published Is the Nasdaq in a Reflexive Bubble? where I went deeper into the reflexive connections in the space and how we could be going through a true Sorosian boom/bust cycle. The piece has now been released from paywall.¹

This is how I concluded it 👇

—> In October of ‘24 I came out with a big picture on the whole AI theme, titled Downside at AI.

In it I went deeper into Cloud and Data Center economics (i.e. ROI), the morphing business models of Big Tech leaders and their increasing capex requirements, quality of earnings etc.

SO, where are we NOW?

I think we finally have the EVENT that puts us face to face with the test of the cycle that has gripped markets since late 2022. Here’s a weekly chart of the Nasdaq100, overlaid with a trend channel since the start of the process.

The index is 2% away from forming a double top, and 5% away from the bottom channel.

Will the trend survive the test, and be further reinforced — or will it fail the test and start the reversal?

If it fails, how far down can we go? Which names will be most affected?

Let’s have a look!