Market Turmoil: Nvidia’s AI Setback Sparks Buying Frenzy
The tech giant Nvidia suffered a massive blow on Monday, with its stock plummeting over 17% and wiping out a staggering $600 billion from its market capitalization. The catalyst behind this sudden downturn was the emergence of a cost-effective artificial intelligence model from Chinese startup DeepSeek. However, retail investors saw this as an opportunity to buy the dip, pouring in a massive $562 million into Nvidia shares on Monday alone.
Retail Investors Defy the Odds
According to data from VandaTrack, this marked the largest single-day inflow into the stock in their records. The buying spree continued on Tuesday, with retail investors injecting another $360 million into Nvidia as the stock rebounded by roughly 9%. Over the two-day period, retail investors injected a whopping $920 million into the company’s shares.
Wall Street Strategists Concur
Leading Wall Street strategists echoed the bullish sentiment of retail investors. Tom Lee, head of Research at Fundstrat, stated in a video to clients that this could be a “buy the dip” moment for Nvidia. Similarly, Bank of America research analyst Vivek Arya noted that the recent downturn presented an “enhanced buying opportunity” for Nvidia, Broadcom, and Marvell.
The DeepSeek Effect
The team behind DeepSeek claimed that their new AI model utilizes cheaper chips and less data, sparking concerns that this could negatively impact future AI chip sales for companies like Nvidia. This development also raised questions about the dominance of US hyperscalers in the market and the consistent trend of Nvidia and other Big Tech companies seeing their earnings estimates revised higher.
Experts Weigh In
Bernstein’s Stacy Rasgon downplayed the significance of the DeepSeek-driven sell-off, calling it “overblown.” Rasgon emphasized that the new developments do not signal “doomsday for AI infrastructure.” As the market continues to navigate this uncertainty, one thing is clear: retail investors are betting big on Nvidia’s future.
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