Increasing my position in $POWL (+0.35%)
Just in for a month now, this selloff deleted all my gains (35% at some point) and put me in negative territory.
Why am I adding more?
The price is 5% down from when I entered, and I belive it was already a good entrance point. The earnings and guidance made it jump higher and I belive the story behind its growth is still alive.
Why did it sell off 20% with the DeepSeek news? Well, $POWL (+0.35%) performance is linked to data centers and energy consumption, as they provide power solutions, and with capex on that being questioned, it fell like a rock, just like $CLS (+9.13%) or $STRL (-2.24%) .
I belive that we have seen an overreaction on the market to sensacionalist news, without deep understanding of what is really going on (I also belive that some stocks are priced to perfection and that a selloff was necessary).
So what is going on?
DeepSeek trained a model and claimed it cost 6M to train, but how did they calculate that cost? By implying a cost of RENTING H800 NVIDIA chips (the “cheaper but not so cheap chips” from Nvidia that can be sold in China). So not considering the cost of the infrastructure, salaries, development and building the model itself etc… just the training hours on rented H800 NVIDIA chips. We don’t even know for sure the truth about this costs, this is a Chinese start up we are talking about.
What we do know is that they did achieve good answers from a LLM for a lesser price, as their model uses a different more efficient aproach, that will for sure be copied soon (they’re an open source model) by the other players if they feel like it is the way to go.
So, is this going to affect the spending in AI?
This is a step in the right direction to make AI something global, that will be used in every aspect of our lifes, and the AI infrastructure will be needed to be able to afford all this demand that will be comming. Everything is going to evolve faster than ever, and AI infrastructure will be key to that, even if improvement can be achieved with less computational power, don’t you think that the US and China are just in the beggining of an AI race and that any of them can afford being left behind?
I obviously don’t know, but I’m not selling my positions on the AI infrastructure related stocks, specially the ones with reasonable P/E like $POWL (+0.35%) and $CLS. (+9.13%)