Historic Nvidia Crash: “The Beginning of an Adjustment to Reality”
The author of The Black Swan, a book about unexpected events, Nassim Taleb, said that the record stock crash of Nvidia due to concerns over DeepSeek‘s AI represents the fragility of the economy and foreshadows even more severe market destruction in the future. His remarks followed a 17% decline in Nvidia’s market value that erased $589 billion, the largest decline ever for a US corporation, and caused the Nasdaq to lose more than 3%. That happened after DeepSeek’s creation of state-of-the-art AI at a fraction of the price competitors like OpenAI and Google is paying, casting doubt on the hundreds of billions of dollars planned for investment in the industry worldwide.
This is the beginning. The beginning of an adjustment of people to reality.
Taleb
Nvidia’s $589B Wipeout Just the Beginning? Taleb Predicts Bigger Crash
The current AI boom began when OpenAI published ChatGPT in November 2022, and since then, demand for Nvidia’s processors has skyrocketed, causing the company’s stock to surge more than 700%. Therefore, there are concerns that the stock market’s general surge has become overly reliant on Nvidia and a small number of other tech behemoths. The first mover doesn’t always win in the end, as demonstrated by the history of technological advancements, Taleb said, citing the early internet boom when Google’s search engine overtook Alta Vista’s.
Asked if there would be another drop like Monday’s, Taleb said the next drop could be much bigger, even two to three times bigger. According to Taleb, the selloff also showed how easily money can be created from a relatively small number of stocks and how much of it comes from Nvidia alone, the majority of which was created recently.
It shows us how much the whole economic structure is fragile because of that,
Taleb
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