Nvidia Rebounds 9% as Retail Investors Capitalize on DeepSell-Off
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Nvidia (NVDA +8.93%) staged a sharp rebound on Tuesday, recovering a significant portion of Monday’s historic 17% decline, which wiped $589 billion from its market capitalization. The recovery was fueled by retail investors, who poured over $560 million into Nvidia shares, seizing what they viewed as a prime buying opportunity after DeepSeek’s AI disruption sent shockwaves through the market.
Institutional investors, who led the selloff, appeared to remain cautious, as concerns over potential AI hardware cost compression continue to loom. Nvidia’s year-to-date performance now stands at -6.8%, as volatility remains elevated amid broader uncertainty in the AI sector.
DeepSeek’s AI Disruption Faces Scrutiny
China’s DeepSeek R1 announcement triggered widespread selling in AI-related stocks, particularly Nvidia, as the firm claimed to have developed an AI model rivaling OpenAI’s GPT-4 with a training cost of just $6 million—a fraction of the estimated $600 million spent by OpenAI. If validated, such efficiency could significantly reduce the reliance on Nvidia’s high-end GPUs, reshaping the AI computing market.
However, skepticism is now creeping in regarding DeepSeek’s claims. Investors are awaiting real-world benchmarks and performance comparisons before reassessing Nvidia’s dominance in AI infrastructure. Until then, market sentiment remains divided, with some seeing the dip as a buying opportunity, while others brace for further downside.
Key Technical Levels & Outlook
Tuesday’s rally pushed NVDA back above $590 per share, after briefly touching $545, its lowest level since November 2024. However, the stock remains below key moving averages, with the 50-day MA at $612 and the 200-day MA near $570, indicating resistance ahead.
Nvidia still faces a critical test as January trading wraps up. Despite the rebound, AI chip demand trends and potential cost pressures from emerging competition remain key variables. With earnings season approaching, Nvidia will need to deliver strong forward guidance to regain the momentum that propelled it to record highs in late 2024.
For now, the market remains in flux, with short-term traders capitalizing on the volatility, while long-term investors assess whether Nvidia’s AI moat remains intact.
Institutional investors, who led the selloff, appeared to remain cautious, as concerns over potential AI hardware cost compression continue to loom. Nvidia’s year-to-date performance now stands at -6.8%, as volatility remains elevated amid broader uncertainty in the AI sector.
DeepSeek’s AI Disruption Faces Scrutiny
China’s DeepSeek R1 announcement triggered widespread selling in AI-related stocks, particularly Nvidia, as the firm claimed to have developed an AI model rivaling OpenAI’s GPT-4 with a training cost of just $6 million—a fraction of the estimated $600 million spent by OpenAI. If validated, such efficiency could significantly reduce the reliance on Nvidia’s high-end GPUs, reshaping the AI computing market.
However, skepticism is now creeping in regarding DeepSeek’s claims. Investors are awaiting real-world benchmarks and performance comparisons before reassessing Nvidia’s dominance in AI infrastructure. Until then, market sentiment remains divided, with some seeing the dip as a buying opportunity, while others brace for further downside.
Key Technical Levels & Outlook
Tuesday’s rally pushed NVDA back above $590 per share, after briefly touching $545, its lowest level since November 2024. However, the stock remains below key moving averages, with the 50-day MA at $612 and the 200-day MA near $570, indicating resistance ahead.
Nvidia still faces a critical test as January trading wraps up. Despite the rebound, AI chip demand trends and potential cost pressures from emerging competition remain key variables. With earnings season approaching, Nvidia will need to deliver strong forward guidance to regain the momentum that propelled it to record highs in late 2024.
For now, the market remains in flux, with short-term traders capitalizing on the volatility, while long-term investors assess whether Nvidia’s AI moat remains intact.