Nvidia: Could Be A Short Opportunity Because Of DeepSeek's R2

Summary

• The release of DeepSeek R2 in May could significantly impact Nvidia if it uses Huawei chips, potentially risking 15-25% of Nvidia's sales.
• China's strategy to reduce dependency on US firms aligns with rumors of DeepSeek using Huawei's SMIC-produced chips, posing a threat to Nvidia.
• I think it is an attractive risk/reward ratio, as there could be a trigger that sends the stock down sharply.
• However, if this does not materialize and everything remains the same, the share will probably remain unchanged. So my strategy is to short Nvidia and most likely liquidate the short after the release of R2.

BING-JHEN HONG

Short-sell thesis

The scenario presented in this article is a short-term opportunity for which I see an attractive risk-reward scenario, and should materialize quite soon in May with the release of DeepSeek R2. It would happen if it were

Analyst’s Disclosure: I/we have a beneficial short position in the shares of NVDA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.