The END Of AI & Chips [AI STOCK DANGER]

uh basically Nvidia sells these h100

chips and they also sell these 8800s and

uh basically they sell these

watered-down versions of some of the

high powered technology chips some of

the best products they sell watered down

versions of that to China because the

chips act has banned the full powered

high-powered versions from actually

being sold to China Nvidia and AMD have

had to deal with this for over a year

now and uh companies like Nvidia and AMD

get somewhere around 20 to 25 percent of

their revenue from China problem is now

they can't sell their best chips to

China so China is incentivized to

manufacture their own best chips by

stealing as much proprietary data as

they can from companies like Nvidia or

even asml where they publicly have

stolen Advanced lithography

euv equipment data sets from and

instruction sets from for how to

manufacture these actual machines that

make the chip

so China is realizing all right well if

we're only going to get

the cheap stuff then let's just use the

cheap stuff until we can make our own

great stuff it's literally the same

thing even at asml itself asml is only

able to sell their duv lithography

equipment to China but not their euv

equipment which is for the most advanced

stuff

so China obviously doesn't like that and

again now they're trying to create their

own companies to manufacture this

equipment and then in the meantime while

they use this watered-down equipment the

Biden Administration has realized you

know what we may not even want China to

be able to buy the water down equipment

let's just ban everything all nearly

everything related to Advanced chips so

basically what they're doing is they're

going from just Banning the most

advanced chips to closing some loopholes

to Banning even more chips

media and AMD aren't very happy about

that stock wise at least in Market

reaction which is understandable because

this should be a hit to revenue

initially we thought okay Nvidia and AMD

got this solved they basically made a

chip with some safeguards on it that uh

now they can still sell to China well

now Biden and the Biden Administration

is suggesting nah

still too much for China

obviously uh that doesn't help with a

U.S Chinese relations which actually

seemed like they were thawing as of the

Biden administration's meeting with with

Chinese officials and just actually the

last few weeks it felt like there was

almost a reset of relations coming

between the United States and China yet

here we are with more aggression coming

uh and uh you know I I'm not here to

suggest everything should be perfect we

got to roll out the red carpet for China

obviously there are a lot of criticism

staff for China but it just seems like

the more of these tensions that we have

the more complicated the relationship

gets between the United States and China

and then we start talking about war with

Taiwan again which there's a lot of talk

about Taiwan potentially creating

election risks uh or post-election risks

for China invading Taiwan the argument

has been made that well hey look if

China ends up losing uh or their party

the party their backing ends up losing

in Taiwan but buckle up but really war

with Taiwan is a topic for a different

video but it just gives you a little bit

of a sense of how much of the tension

there really is between the United

States and China

and just as we thought it was cooling it

seems like the Biden Administration has

figured out how to reactivate some of

that pain now uh so we've got that in

the world of AI then we've got this snow

Nvidia partnership people keep asking me

about so let's touch on that quickly and

then after we touch on that I really

want to give you some of my personal

thoughts about is this whole AI craze

just hype and how should we really be

positioned around it so we'll talk about

exactly that okay so regarding the snow

in video partnership uh this has been

done before this isn't like something

super crazy and unique these

Partnerships have literally been done

before snowflake had virtually the same

partnership and I think a rough easy way

to think about it is when you look at

your calendar and you see an expiration

on June 30th you go to the link down

below like meet kevin.com and you sign

up for the programs and building your

wealth because you know you're going to

lock in the best price guaranteed and

you're going to continue to get amazing

content for free as the courses grow in

value link down below right anyway so

basically what was announced is

there's this official partnership that

now uh well let me backstep for a moment

before AI was AI Big Data was like this

sexy phrase that everybody talked about

back in the day and

anybody wanted to understand how are we

going to analyze big data and it was

companies like Snowflake and palantir

let's suggested hey put all of your big

data into our bucket and our bucket

manager will draw insights for you

insights that you might not have even

realized exist it's kind of like what

palantir does with their criminal

database and their terrorism database

and their War databases where it's like

give us everything that you know and

we'll Stitch pieces of the puzzle

together that you didn't even realize

were happening this is obviously

leveraging neural Nets which is a form

of artificial intelligence it's just all

basically been rebranded as AI because

that's a sexy thing to say these days

point is Nvidia has a Nemo platform that

allows the development of language

models and a lot of these database

companies are like wait a minute we

don't want people taking their data off

of our platforms and running away to

these you know newfangled AI things so

how can we figure out how to just

Rebrand what we have as having Ai and

then maybe adding in some you know

updated features the problem is these

features don't really seem that

fantastic so I'll give you their

marketing pitch and then I'll give you

some of their example use cases

and then I'll let you decide so their

marketing pitch is that quote together

Nvidia and snowflake will create an AI

Factory that helps Enterprises turn

their own valuable data into custom

generative AI models

okay so the whole point of Snow's

existence has always been that you could

take a lot of data and do more with it

now it's just being rebranded as an AI

play okay so what is this AI Factory

what are some of the use cases well

here's the type of use case

Health Care insurance models could

answer complex questions about

procedures that are covered under

various plans

okay first of all we have language Bots

Bard

gpt4 gpt4 is pretty exceptionally great

and quite frankly what it seems like

everybody is doing is just taking gpt4

and plugging it into every stupid thing

that exists in the world

and it just does the same thing that

gpt4 does everywhere call me a little

bit cynical

but the reality is use the chatbot

doesn't matter if I have to go to the

tab for open AI or here now the idea is

that oh well you could train the

language model on your own proprietary

data fine

I'm just not convinced how profitable

that kind of service will be more so

than what the company has already been

doing do I really think this partnership

is a game changer where all of a sudden

I'm going to look at the income

statement for Snowflake and go

you've plugged the in essence I'm

oversimplifying right

gpt4 into snowflake I will Mark your

revenues up at 10 a year

beyond what I previously thought no

and that's one of the frustrations that

I have with AI but I'll get to more of

that in a moment here's another one a

financial services model could share

details about specific lending

opportunities available to retail and

business customers based on specific

circumstances

okay we don't need AI to do that I can

hand you a pamphlet that's like yo if

your credit score is 640 here's what we

got for you a crap credit card and if

your credit score is 740 we got a HELOC

for you and a personal loan for you and

you know uh you know a happy ending I

don't know whatever point is

it's not it's not the the examples

they're giving aren't that impressive

uh deploying custom llms used for

generative AI applications such as chat

Bots and intelligence search

we get it like that's that's basically

what everybody is plugging in right now

everybody's figuring out how to harness

the power of this gpt4 Innovation plug

it in so where does my cynicism come in

and what do I think is a danger for this

AI craze now keep in mind

I I feel like honestly I think sometimes

it's the most frustrating part of of

what I do is

last last fall uh I started really

getting excited about chips because

chips were crap you know nobody wanted

to touch chips it was like October uh

everybody's like dude PC demand is in

the toilet chips are dead nobody's gonna

want chips anymore and I'm like I like

that chips oh and the many fundamental

reasons for this before even AI came

around like these suckers are oversold

the orange recession is over for those

particular plays here's an opportunity

anyway so I went really heavy in chips

but now the story played out to with the

benefit of AI much faster than anybody

thought it would but now as it's playing

out I'm catching myself being like no no

no

I have my concerns about this as excited

as I am about artificial intelligence

and some of the Practical use cases

you know I I think right now you're

probably looking at maybe a 15 20

efficiency boost if you harness AI

correctly uh whether that is learning

how to speak better in presentations and

videos and being more concise and and

tone checking your your letters or

dispute resolution I mean there are so

many different things that we could do

with it it's phenomenal I mean I have a

course but this is really you know a

income course how to make more money

course how to make more money and get sh

19 done faster it features AI because

we've got about 40 AI lectures and

they're really really good and these are

practical lectures on how to actually

use this stuff rather than just the you

know the basic kind of stuff you see on

Twitter or whatever but anyway the

frustration that I have is beyond this

initial boost the Innovation that we're

seeing has gone to like zero in my

opinion I know that sounds harsh and

rough and I'm not here to be like an AI

Luddite and say oh ai's you know crap AI

is great and it's going to do great

things over time but let me do this I'm

going to graph and this is why I'm I

feel frustrated uh and I'm trying to get

to that point so

let me graph you this if I'm going to

graph the first derivative of the AI

Innovation craze here's what you got

no change no change no change

GPT and Bard and all that craze

and no chain oh no change no change no

change okay this is what it feels like

so it feels like we had this big

explosion of innovation and really like

if we if we don't go to the first

derivative the graph of AI usage

probably looks like

this skyrocketing and they kind of like

staying here right so like we've

definitely leveled up

but when you look at the first

derivative

you you you're kind of like yay we had

an innovation moment but now you're kind

of flat again or it feels like the

re-innovation isn't that great

again don't get me wrong

there's certainly improvements happening

so I think maybe the way to put this is

maybe maybe there's a you know a a slow

and steady Improvement right but even

that is is it doesn't seem to be super

rapid right now what kind of risk does

this create for chips well here's the

risk it creates

the risk it creates is growth that's

being priced into these chip companies

and this is a realistic concern it's not

just trying to bandwagon off oh it's a

red day for chips something that I've

been really trying to

I don't want to say cope with but like

deal with it's like I have this problem

because I worry about people doing this

so here's what's happening

first people are like okay nvidia's

quarterly revenue for chips is now

estimated to be you know server chips

seven billion dollars so

oh I can't wait to get over this so what

people are doing is they're annualizing

that and they're saying all right

times four so in video make 28 billion

dollars on server trips and then what

they're doing is they're gonna say all

right well it's going to grow at well if

it used to if it grew at 100 in a

quarter let's just say it'll grow at 50

a year

okay

so now what people are doing is they're

saying all right well let's go 24 25.

26 27 and they're extrapolating out all

right we're gonna go

uh and grow this over and over again uh

by 1.5 uh let's do this a little bit

better uh whatever we just quickly put

this together here so they're growing

this Revenue so rapidly that uh that

basically you've got this market pricing

and Perfection for AI growth of of 50 of

extra you know spending on server chips

but my concern is ignoring China

if your AI Innovation is maybe a little

better than this like you had a big

boost and then and then maybe you've got

you know some kind of like uh I guess if

this was a first derivative chart we'd

probably be a little bit more like

that you know where you've leveled up a

little bit

but if we go over here that's not

consistent with 50 growth over and over

and over again it's really consistent

with a lot of growth really quickly in

the next quarter or two

and then a Slowdown

in that growth rate pretty rapidly once

people have these servers in fact I've

gotten to the site at this this point of

thinking to myself

if everybody gets their age 100

how much processing power do you really

need for these chat Bots

and then you upgrade to the h100s and

then what then you're flat again and

then you get back to the slow Innovation

curve of AI until the next big explosion

in Ai and all of a sudden now instead of

projecting Nvidia having 141 billion

dollars of server chip Revenue in in

2027. maybe the more realistic thing is

okay they had 28 Bill even annualizing

that could be generous but maybe the

growth was only 25 percent

and look how remarkably the numbers

change after a few years oops let's

actually do it correctly here if your

growth rate is half and and the

difference is is massive so look at that

you're less than half by 2027 if your

growth rate is is that much slower in

this case it's 25 uh you're less than

half because of the comp nature of

compound and growth uh and that just

gets even more extended so when people

do these DCF models it's a discounted

cash flow and they're running these

numbers into 2033

you know trying to do these 10-year DCFS

on AI they're assuming that the AI

Innovation is going to keep keep growing

as rapidly as GPT did here

but it would what if it was just a flash

in the pan so I personally am frustrated

and this kind of goes back to why I said

it was frustrating because

I love the chip so much at the end of

last year

and I think chips are going to be so

important for the next decade but part

of me has the struggle of like

what if this these sales are just a

flash in the pan like we had a big boost

in sales and then we level back off

slightly above where we were before like

slightly above trend

in fact that's another way to analyze

that is like think about it like

stimulus money for covid right so so uh

let's say that the trend of personal uh

you know disposable income the trend of

personal disposable income looks like

that let's call that the trend okay and

then you get kova that comes around

and all of a sudden you get this this

whole and this massive Spike uh of of

money that people get and then you're

back to this sort of negative hole and

then you're kind of you know bouncing

back to turn this is a return to trend

and maybe maybe that trend is a little

bit higher right so maybe we say all

right now we're kind of like this and

that purple trend line actually needs to

kind of start bending up right you do

something like this and so this extra

bit right here is just the net benefit

from coven that's fine but is the trend

line here now no of course not and so

that is a concern I have for AI and I'm

concerned that analysts are pricing in

this sort of goldilock-ish this here

rather than what might just be a nominal

boost a more nominal boost so that's my

take uh let me see what other notes I

had here on the uh partnership between

Snowflake and Nvidia AI Factory was

really what they were talking about you

know I I think they uh they're trying to

lean into this idea of like don't know

what to invest in in AI well snowflake

is now the shovel seller no you're not

you're not the shovel seller Nvidia and

and tsmc and uh and asml they're the

shovel sellers

but uh oh yeah and then this like

supports text to image text image to

text like all this stuff

with their great Innovations already for

it and now what companies are doing is

they're just plugging it in like

yesterday who was it it was um I think

it was Ross he's like have you ever seen

a lion eat

it was responding to somebody's

hypothetical joke uh Omar here on

Twitter was making a joke he's like all

animals are vegans why can't we be too

obviously we know all animals aren't

vegan so he's joking but Ross replies

ever seen a lion eat like Ross he's

joking but anyway so I replied I go

Omar's story checks out

and here's a little AI generated image

of a lion and his you know fruit that

he's eating

obviously this isn't real but it looks

pretty dang awesome

and it took me all of like 10 seconds to

make

okay great is that like did that I mean

it increases my productivity somewhat

but you know to some extent

uh in this in this example it's also

just a joke uh look for some purposes

it's it's fantastic again I think AI can

give you that 15 productivity boost for

sure maybe even more if you uh implement

it correctly but uh but as far as this

uh

this all in on AI uh software makes me

the most nervous but I've started to get

nervous also about chips so uh do you

mean AI is transitory

no I don't want to say it's transitory

like it's going to be here to stay right

this is not to say it's like okay chat

GPT is here and now it's not no no that

would be like transitory I would say the

rapid boost of chips sales

might be somewhat transitory potentially

are some Industries more ripe for

Innovation from AI

well you mentioned Transportation

Hospitality entertainment I actually

think it would be more like health care

and to some extent Finance those

probably more in the future I think yes

with Transportation but that's kind of

like your FSD style artificial

intelligence I actually think that's

probably your

most intelligent artificial intelligence

to some extent that exists today is full

self-driving the Tesla fsda I think it's

really really incredible uh Hospitality

entertainment I think these might be a

little bit harder

uh these are this is so very labor

involved but uh

look I remember working at Jamba Juice

back uh how long ago was that I don't

know 15 years ago and uh one of the

managers is like oh we have this

software that's like

schedule three people for today and the

manager was looking at it going like

I think it's going to be a slow day why

does it say schedule three people like

I think it's gonna be slow and the

software had all the big data of the

prior 10 years of Jamba Juice sales

and and when people come in you know

when the humidity is this level and the

weather is this level and this is that

and a lot of the holiday schedule it

puts all that big data together

and the system's like no no listen to

the AI schedule three people so the

manager like all right whatever I'll

schedule three people and you know the

first hour of the shift the boss is like

I knew it stupid computer wasting our

money again and then all of a sudden you

get like a three hour long Rush

and then afterwards the manager's like

damn how'd the AI do that

they didn't call it AI then they kind of

the computer program

so it's all just like fittery branded

you know uh

uh anyhow those are my thoughts on on

this this AI stuff uh okay good now I

want you to know this when it comes to

AI

time is what's going to make you money

and if you can prove that value to an

employer you'll always be able to be

employed so this is another way of

making sure that you don't get replaced

but

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