https://www.digiteex.com Digitex Solutions Fri, 21 Feb 2025 20:36:15 +0000 en-US hourly 1 224764844 https://www.digiteex.com/were-buying-the-dip-in-an-ai-data-center-play-still-under-pressure-post-deepseek/ https://www.digiteex.com/were-buying-the-dip-in-an-ai-data-center-play-still-under-pressure-post-deepseek/#respond Fri, 21 Feb 2025 20:36:13 +0000 https://www.digiteex.com/were-buying-the-dip-in-an-ai-data-center-play-still-under-pressure-post-deepseek/ We’re buying 25 shares of Eaton just below $300 each. Following Friday’s trade, Jim Cramer’s Charitable Trust will own 325 shares of ETN, increasing its weighting to about 2.7% from about 2.5%. Friday’s market losses picked up steam in the afternoon with momentum stocks continuing to roll over and cyclical stocks falling on weakening economic data. Fortunately, we have limited the impact of these losses by building up a huge war chest of cash. It’s no secret that the economy has slowed over the past few weeks. Using the Atlanta Fed GDPNow forecast as a guide, the latest estimate of first-quarter economic growth is 2.3%, down from a 3.9% estimate on Feb. 3. We’re not surprised to see consumer discretionary and industrials as two of the worst-performing sectors this month. However, we do expect the economic slowdown to be short-lived. So, we’re dipping into our cash hoard to beef up one of those beaten-down industrial names, which makes electrical components and power management systems used to run energy-intensive AI data centers. With Eaton shares trading below their DeepSeek freakout levels, we see this as an opportunity to buy more. ETN 1Y mountain Eaton 1 year The first instinct when the Chinese startup claimed that it made a more efficient, lower-cost large language model was that the world wouldn’t need as many data centers to power artificial intelligence. Since data centers are one of Eaton’s largest end markets and one of the company’s fastest-growing, the DeepSeek news on Jan. 27 caused shares to fall 15% to about $311 each. Unlike Club AI chip king Nvidia , whose stock has recovered most of its DeepSeek losses, Eaton shares have a longer road to recovery. However, as we’ve learned in recent weeks, there has been zero change in the spending habits of the big tech hyperscalers building out these data centers. In fact, these titans plan to invest more money in their AI infrastructure in 2025 versus last year Club names Amazon , Microsoft , Meta Platforms , and Alphabet all raised their capital expenditure outlooks for this year, erasing concerns that one would break ranks and slow down their investments. We also heard Eaton’s thoughts on the subject when the company reported strong earnings on Jan. 31. During the quarterly conference call, management explained that a shift toward more inferencing data centers and away from training specialized data centers would be a positive development for the business because it would speed up construction times without a change in the amount of electrical needed. In short, DeepSeek’s impact on the pace of AI infrastructure investment has been overblown. And, that’s why we are buyers of Eaton, a stock we believe in for the long haul. (Jim Cramer’s Charitable Trust is long ENT, AMZN, MSFT, META, GOOGL, NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.


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]]> https://www.digiteex.com/were-buying-the-dip-in-an-ai-data-center-play-still-under-pressure-post-deepseek/feed/ 0 4998 https://www.digiteex.com/deepseeks-hardware-spend-could-be-as-high-as-500-million-report/ https://www.digiteex.com/deepseeks-hardware-spend-could-be-as-high-as-500-million-report/#respond Fri, 31 Jan 2025 23:45:58 +0000 https://www.digiteex.com/deepseeks-hardware-spend-could-be-as-high-as-500-million-report/ Faisal Bashir | Lightrocket | Getty ImagesChina’s DeepSeek became the biggest topic in tech this week, with many in the industry and on Wall Street focused on a single number: $6 million.In DeepSeek’s paper about its newest artificial intelligence model, the company said that its total training costs amounted to $5.576 million, based on the rental price of Nvidia’s graphics processing units. DeepSeek included a clear caveat, saying that the number included only the model’s “official training” and excluded the costs tied to “prior research and ablation experiments on architectures, algorithms, or data.”Early in the week, DeepSeek’s AI Assistant took the coveted spot for most-downloaded free app in the U.S. on Apple’s App Store, dethroning OpenAI’s ChatGPT. Global tech stocks sold off, with chipmakers Nvidia and Broadcom losing a combined $800 billion in market cap on Monday.A new report from SemiAnalysis, a semiconductor research and consulting firm, added more context to DeepSeek’s expenses. The firm estimated that DeepSeek’s hardware spend is “well higher than $500M over the company history,” adding that R&D costs and total cost of ownership are significant. Generating “synthetic data” for the model to train on would require “considerable amount of compute,” SemiAnalysis wrote.The report said the Claude 3.5 Sonnet from Anthropic cost “$10s of millions to train,” but noted that Anthropic raised billions for dollars from Amazon and Google, an indication of how much more money is required to run the models and the company.”It’s because they have to experiment, come up with new architectures, gather and clean data, pay employees, and much more,” SemiAnalysis said.DeepSeek’s own paper does not include an estimation of its compute costs. The company didn’t immediately respond to a request for comment.”To be clear DeepSeek is unique in that they achieved this level of cost and capabilities first,” SemiAnalysts wrote. The firm added that DeepSeek’s R1 “is a very good model” and that “catching up to the reasoning edge this quickly is objectively impressive.”Experts and analysts this week touted the quality of DeepSeek’s model, and noted how impressive it is considering the U.S. curbed chip exports to China three times in three years. That led to concerns that the U.S. is falling behind its chief adversary in a market that’s predicted to top $1 trillion in revenue within a decade.Bernstein analysts wrote in a note Monday that “according to the many (occasionally hysterical) hot takes we saw [over the weekend,] the implications range anywhere from ‘That’s really interesting’ to ‘This is the death-knell of the AI infrastructure complex as we know it.'”DeepSeek was founded in 2023 by Liang Wenfeng, co-founder of High-Flyer, a quantitative hedge fund focused on AI. The AI startup reportedly grew out of the hedge fund’s AI research unit in April 2023 to focus on large language models and reaching artificial general intelligence, or AGI — a branch of AI that equals or surpasses human intellect on a wide range of tasks, and that OpenAI and others are pursuing.DeepSeek is still wholly owned by and funded by High-Flyer, according to analysts at Jefferies.The buzz around DeepSeek began picking up steam earlier this month, when the startup released R1, its reasoning model that rivals OpenAI’s o1. It’s open-source, meaning that any AI developer can use it.Like other Chinese chatbots, DeepSeek’s has limitations on certain topics: When asked about some of Chinese leader Xi Jinping’s policies, for instance, DeepSeek reportedly steers the user away from similar lines of questioning.OpenAI CEO Sam Altman has praised the model publicly, but the company has also said it believes there’s evidence that DeepSeek improperly harvested OpenAI data to build its product.At an event in Washington, D.C., on Thursday hosted by OpenAI, Altman said DeepSeek is “clearly a great model.””This is a reminder of the level of competition and the need for democratic Al to win,” he said. He said it also points to the “level of interest in reasoning, the level of interest in open source.”WATCH: Nvidia CEO Jensen Huang and President Trump meet on AI policy


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