Cramer's Morning Take: DeepSeek Panic 1/27/25

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Jim Cramer (0:46)

Hey, it's Cramer, and this is my morning take on the market from today's CNBC Investing Club Morning Meeting.

Jeff Marks (0:52)

Why don't we take a step back first, what is DeepSeek, right? It's a Chinese startup, a large language model, and basically, it was created, it's an open source model, it was developed in two months at a cost of under $6 million. That's what they claim, which I think is key. And what it's doing today is, if people are looking at, they're comparing DeepSeek, which actually has some favorable comparables to like a ChatGPT, large language models like that. And what the market is saying today is, if DeepSeek can do this so efficiently, why should there be this huge spending wave on Nvidia chips and do we need so many data centers? And is our energy needs really going to be so crunched? So that's the question people are having today. When there are questions, no answers.

It's just natural that people sell.

Jim Cramer (1:44)

So Nvidia at the low at this moment, Broadcom at the low at this moment. What is the case to sell Broadcom here and Nvidia here? And what is the case to buy?

Jeff Marks (1:55)

Well, the case would be that if companies can figure out how to make these large language models more efficiently, then why do we need to spend so much? And why do we need to spend so much on Nvidia chips? Why do we need to invest billions of dollars? Could there be a pause in over orders? Could there be a digestion phase? That's the question. There's a lot of debate happening right now. You know, the analyst community kind of all over the place. A lot of bulls defending it. You had Bernstein, Stacey Raskin basically saying they don't think DeepSeq built this AI model for that much money. An initial reaction is a little panicky. There's also this idea, a lot of this Jevons paradox where this is Satya Nadella, Microsoft CEO tweeted overnight that as AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can't get enough of. So it's this idea of if it's cheaper to use, adoption will become more widespread, and therefore you'll be using even more of it.

Jim Cramer (2:53)

But very interesting, it's Satya and Mark Benioff agree on this, and Mark's been talking a little bit more positive, tweeting more positive about Microsoft. You'll see Salesforce is up nicely. The one that I would actually think, if there had to be a buy, would indeed be Broadcom, because Broadcom is bigger than just AI. It's obviously a very important component. I wish you could get back to here, but I would point out that if someone said, Jim, put a gun to your head, which one do you buy? I would say, of course, first take the gun away from my head. But that this is the one that I think they'll rally to more than they'll rally to Nvidia.

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