Elon's Greatest Invention... Hidden in South Memphis?

In South Memphis, I uncovered what could be Elon Musk's biggest invention yet. It's so secretive, rivals are flying drones to spy on it. If you're serious about investing in AI, now's the time to see what's really going on inside those walls.

Betting Against Nvidia Again

David Pinsen
January 29, 2025

Cover Image Made With AI

Why We Bet Against Nvidia Last Friday

In our post last Friday, we laid out our bearish thesis for Nvidia, Inc. (NASDAQ:NVDA):

A Chinese start-up created its own competitor to Open AI's ChatGPT, called DeepSeek, and some of the smartest people in tech, like Steve Hsu and Marc Andreessen are extremely impressed with it. The reason this seems bearish for Nvidia is the Chinese apparently accomplished this with only a few million dollars in capital, meaning they didn't need lots of expensive chips of the sort Nvidia sells. And if they don't need them, maybe everyone else doesn't need so many of them either.

What About Jevons Paradox?

Over the weekend, others came to the same conclusion, but some, including Microsoft Corporation (MSFT) CEO Satya Nadella, brought up Jevons Paradox.

You know already that Nvidia shares tanked 17% on Monday (which enabled us to exit half of our puts from Friday for a 2,633% gain), and then the stock bounced back almost 9% on Tuesday. On Tuesday night, Steve Hsu addressed Jevons Paradox on X:

Re “Jevons paradox” and NVDA valuation

This is a glib response which does not take into account timescale mismatch. The people buying NVDA chips today only have a few years before the value of the chips depreciates by 50% or more. They have to make ROI on their chips in the near term. But actual revenues flowing to genAI are not very big right now, and if much of this is captured by free open source models, which don’t necessarily require NVDA chips to run (see Groq or even legacy hardware for distilled models), and are ~30x more efficient, then the investment today in NVDA chips may turn out to have low ROI. Similarly, if everyone is as efficient as DS in model training the NVDA chips bought today may be more than enough for this training.


I can imagine that in the next few years DS V3 and R1-like models (including other highly optimized Chinese models like Qwen or from ByteDance) are widely used in AI applications. But these models need ~1/30 the compute for inference, so the demand over the next few years for NVDA chips sold today could be much less than people anticipate, even with healthy growth in adoption of genAI in schools, workplaces, web search, etc. (30x is hard to make up!). On top of this if model training is also much more efficient (a la DS), and maybe data-limited for pretraining, the model training component of demand for NVDA chips could also be much smaller than expected.

I’ll be shocked if in a few years the NVDA advantage in genAI hasn’t mostly disappeared. It isn’t that hard to design competitive chips for LLM-transformer computations. Many entities from GOOG to AMD to Huawei etc. are doing it. NVDA have the CUDA software library lock-in (ex-PRC, where people may be forced to switch to the HW Mindspore ecosystem), but that is also going away over time.

I’m at an AI for CX (customer service, call centers, etc.) meeting rn. Altho CX is one of the best targets for genAI replacement of human labor, there is tons of friction and hesitance to deploy from human decision makers. It will take years before ~50% of human FTEs are replaced by AI, even tho it’s clearly possible to do it.

That last paragraph goes to why Steve Hsu is worth paying attention to here. He understands both the science behind AI, as a Caltech-trained, PhD physicist, and he also understands the business aspect of it, as the founder of an AI business.

Portfolio Armor's Take

All else equal, our automated system gives preference to stocks that have suffered a short term decline, because, historically those names have outperformed. Despite that, Nvidia wasn't one of our system's top names on Tuesday or Wednesday. Not only that, but gauge of options market sentiment was neutral on it, rather than bullish. Not a good sign.

Timing Our Trades

If Steve Hsu is right about declining demand for Nvidia GPUs, we might get a hint of that in next month's earnings call, but we'll probably see a bigger impact two quarters out.

  • February 2025 Guidance: Possible early hints (e.g., softer Q1 FY2026 outlook, margin concerns), but not a full collapse.
  • Stock Reaction: If investors believe Hsu's thesis, NVDA could sell off even on slightly cautious guidance, as the market prices in longer-term risks.
  • Inflection Point: The August 2025 earnings call (FY2026 Q2) is when Hsu's bear case would more clearly hit guidance.

In short: The February 2025 call could be the canary in the coal mine, but not the full explosion.

So our plan here is to place a moderately bearish bet on Nvidia expiring at the end of February, and then a more aggressive bearish bet against it expiring in September, after Nvidia's August earnings report. If you are subscribed to our trading Substack, you can check your email for the specific trades. If not, you can subscribe below. 

And if you just want to limit your risk, you can download our optimal hedging app by aiming your iPhone camera at the QR code below, or by tapping here, if you are reading this on your iPhone. 

If you’d like to stay in touch

You can scan for optimal hedges for individual securities, find our current top ten names, and create hedged portfolios on our website. You can also follow Portfolio Armor on X here, or become a free subscriber to our trading Substack using the link below (we’re using that for our occasional emails now).

Popular

Trump keeps saying the GOP mega bill will eliminate taxes on Social Security. It does not

WASHINGTON (AP) — President keeps saying that Republicans' mega legislation will eliminate taxes on federal benefits.

Elon Musk Renews Demand for Jeffrey Epstein Files Release, Weeks After Alleging Trump Is Named in Them

Elon Musk has once again demanded the release of the unredacted Jeffrey Epstein files. This comes in the wake of his allegations against President Trump.

Back This Medical AI Tech - Ad

You don't often find healthcare tech company valued at $4M. HeartSciences is an exception. With $75M invested, including R&D, clinical trials, and product development, their patented AI software is approaching FDA submission, a potential major inflection point.

Trump Hit With Backlash Over Use of Antisemitic Slur at Iowa Rally

President Trump faced criticism from Jewish leaders and lawmakers on Friday after using a term historically associated with antisemitic stereotypes.

AstraZeneca In $15 Billion Talks For Drug That Could Upend Lung Cancer Treatment

AstraZeneca is in advanced talks with Summit Therapeutics over a potential $15 billion deal for the lung cancer drug ivonescimab.

The Tesla Shock Nobody Sees Coming - Ad

While headlines scream "Tesla is doomed"...Jeff Brown has uncovered a revolutionary AI breakthrough buried inside Tesla's labs. One that is helping AI escape from our computer screens and manifest itself here in the real world all while creating a 25,000% growth market explosion starting as early as July 23rd.

Inside The Trump Family's $620 Million Crypto Empire

Since retaking the White House, Donald Trump's reported net worth has remained broadly stable, around $6.5 billion on Election Day to roughly $6.4 billion today.

Putting Your Name on This List Could Hand You $1,270 on Friday - Ad

URGENT: On Tuesday, a simple set of instructions will be sent out to an elite group of investors. The folks in this group will have the opportunity to place a 10-minute trade that could double their money by Friday. Consider this your invitation to join them. The next trade is just days away.

Ex-Trump Family Attorney Raises Alarms Over Trump's Actions as President: 'I Have Never Been As Concerned'

Abbe Lowell expressed serious concerns about the potential harm that the current administration could cause to the country's institutions.

Award-winning international correspondent launches a new journalism platform

NEW YORK (AP) — Jane Ferguson has won awards for unflinching reporting from dangerous lands including Afghanistan, Somalia and Yemen. So she was unlikely to be intimidated by seeking financing for a new journalism platform, despite tough times for the news industry.

Trump's "New Golden Age" Tech to Create $12 Trillion Boom? - Ad

Trump's about to prove everybody wrong. He's been ridiculed for his moves in the trade war... But everything is about to make perfect sense the moment people see Trump's "New Golden Age" tech. Because this little-known technology could ignite a $12 trillion manufacturing revolution... And early investors could see stratospheric gains.

UnitedHealthcare Group, Gryphon Digital Mining, AMC Entertainment, Centene, And Tesla: Why These 5 Stocks Are On Investors' Radars Today

Major U.S. indices were mixed on Tuesday, with the Dow Jones Industrial Average rising 0.9% to 44,494.94 and the S&P 500 declining 0.1% to 6,198.01. The Nasdaq fell 0.8% to 20,202.89. These are the top stocks that gained the attention of retail traders and investors throughout the day:

US judge says China's Huawei Technologies must face criminal case for racketeering and other charges

BANGKOK (AP) — A U.S. judge has ruled that China’s Huawei Technologies, a leading telecoms equipment company, must face criminal charges in a wide reaching case alleging it stole technology and engaged in racketeering, wire and bank fraud and other crimes.

Have You Seen this Strange Elon Musk Device? - Ad

Tech legend Jeff Brown predicts this "space technology" will be Elon Musk's next trillion-dollar business, and it will make a lot of people rich. This could be the biggest internet innovation since the first web browser Netscape kicked off the internet boom in the late 1990s.

Trump Says Israel Ready For 60 Day Ceasefire In Gaza, Hopes Hamas Takes The Deal Because It Won't 'Get Better'

Trump proposed 60-day ceasefire in Gaza, which Israel has agreed to. Qatar and Egypt will deliver the proposal to Hamas. Trump meets Netanyahu next week.

Datadog Stock Surges On S&P 500 Inclusion

Datadog Inc (NASDAQ:DDOG) shares are trading higher in Wednesday's after-hours session after it was announced that the company will join the S&P 500.

How to Hack a $1.3T Market - Ad

Forget concrete. The new foundation for real estate success is digital, and Pacaso leads the way. Their tech unlocks a $1.3T real estate market. They've already earned $110M+ in gross profits in their operating history and reserved the Nasdaq ticker PCSO.

FDA Submission Expected This Summer - Invest Before It Happens - Ad

This company is making heart disease easier to detect with AI. Their tech has officially been designated a "Breakthrough" by the FDA. You now have an opportunity to get in at a potential inflection point.

Iran’s president orders country to suspend cooperation with UN nuclear watchdog IAEA

DUBAI, United Arab Emirates (AP) — Iran’s president on Wednesday ordered the country to suspend its cooperation with after American and Israeli airstrikes hit its most-important nuclear facilities, likely further limiting inspectors' ability to track Tehran's program that had been enriching uranium to near weapons-grade levels.

What's inside Elon's building in Memphis will shock you - Ad

Inside Elon Musk's Memphis site lies a supercomputer built to power the world's first superhuman AI. It could make Elon a trillionaire - and new millionaires, too. With just $500, you could get in before the July 1st funding window closes.

A strike by air traffic controllers is disrupting travel to, from and over France

PARIS (AP) — About 40% of flights were canceled Friday at all Paris airports and tens of thousands of passengers were rearranging plans at the height of the summer travel season because of a strike by French seeking better working conditions.

Cramer Praises Monster Beverage As 'Smoking Hot,' Warns Investors About This AI Stock

Cramer recommends buying Okta (OKTA) as it reported strong earnings, but not to trust Nebius Group (NBIS), while Sweetgreen (SG) and Monster Beverage (MNST) have mixed views. He also suggests buying McDonald's (MCD) while their partnership with Krispy Kreme (DNUT) will end in 2025.

Is Elon's Empire Crumbling? - Ad

Jeff Brown - the legend who called Tesla and Nvidia early - says Elon is about to launch a $25T AI revolution. This isn't another chatbot. It's real-world AI that could 14X the impact of ChatGPT. But after July 23rd, it may be too late.

Here's how millions of people could lose health insurance if Trump's tax bill becomes law

WASHINGTON (AP) — Roughly 11.8 million adults and children will be at risk for losing health insurance if Republicans' domestic policy package becomes a law.

Intel (INTC) Stock Falls On Report Of Major Chip Strategy Shift

Intel shares are trading lower Wednesday afternoon. CEO Lip-Bu Tan is reportedly considering a strategic pivot away from marketing its costly 18A chipmaking process.

Elon's Greatest Invention... Hidden in South Memphis? - Ad

In South Memphis, I uncovered what could be Elon Musk's biggest invention yet. It's so secretive, rivals are flying drones to spy on it. If you're serious about investing in AI, now's the time to see what's really going on inside those walls.

Shares in Asia are mixed amid Trump's new tariff deadlines

Shares were mixed in Asia on Wednesday, following a choppy trading day on Wall Street as the Trump administration pressed its campaign to win more favorable trade deals with nations around the globe.

U.S. employers likely added 115,000 jobs last month as labor market continues to cool

The steady slowdown in U.S. hiring likely continued in June as President Donald Trump’s trade wars, federal hiring freeze and immigration crackdown weighed on the American job market.

Back This Medical AI Tech - Ad

You don't often find healthcare tech company valued at $4M. HeartSciences is an exception. With $75M invested, including R&D, clinical trials, and product development, their patented AI software is approaching FDA submission, a potential major inflection point.

Figma's Crypto Playbook Revealed Ahead Of IPO: $69 Million In Bitcoin ETFs, $30 Million More Coming Soon

Design company Figma (NYSE:FIG) has filed for an IPO and, along with sharing impressive revenue figures and year-over-year growth, the company's investments in Bitcoin (CRYPTO: BTC) are making headlines.

The Tesla Shock Nobody Sees Coming - Ad

While headlines scream "Tesla is doomed"...Jeff Brown has uncovered a revolutionary AI breakthrough buried inside Tesla's labs. One that is helping AI escape from our computer screens and manifest itself here in the real world all while creating a 25,000% growth market explosion starting as early as July 23rd.

Trash and tension mount in Philadelphia on Day 8 of workers strike, while some seek pop-up haulers

PHILADELPHIA (AP) — As trash and tempers heat up across Philadelphia on by blue-collar city workers Tuesday, some residents and small business owners are hiring pop-up hauling services to clear their blocks of garbage, even as they broadly support the union’s .

Putting Your Name on This List Could Hand You $1,270 on Friday - Ad

URGENT: On Tuesday, a simple set of instructions will be sent out to an elite group of investors. The folks in this group will have the opportunity to place a 10-minute trade that could double their money by Friday. Consider this your invitation to join them. The next trade is just days away.

Faced with geopolitics and trade war, US companies in China report record-low new investment plans

WASHINGTON (AP) — American companies in China are reporting record-low new investment plans for this year and declining confidence in profits, while uncertainty in U.S.-China relations and President Donald Trump’s tariffs have become their top concerns, according to a business survey released Wednesday.

Trending Now

Information, charts or examples are for illustration and educational purposes only and not for individualized investment management This message contains commercial elements, such as advertising. We only send these offers to those who have opted in to our newsletter. Past performance is not indicative of future results. For these reasons we strongly suggest trading in a DEMO/Simulated account. The information provided by us is for educational and informational purposes only. We make no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended and have not determined if the statements and opinions of the advertiser are accurate, correct or truthful. If you use, act upon or make decisions in reliance on information contained or any external source linked within it, you do so at your own peril and agree to hold us, our officers, directors, shareholders, affiliates and agents without fault.

Copyright finstrategist.com
Privacy Policy | Terms of Service