📈 Nvidia's $600B Plunge

China's DeepSeek pummels U.S. Tech stocks, SoFi stock sinks, Pfizer proxy fight avoided, AT&T shares rise on strong Q4, Nvidia has biggest one-day loss in U.S. history

Good morning.

⚡ The Fast Five → China's DeepSeek pummels U.S. Tech stocks, SoFi stock sinks, Pfizer proxy fight avoided, AT&T shares rise on strong Q4, Nvidia has biggest one-day loss in U.S. history

🔎 Market Trends → Nasdaq drops 3% as China's DeepSeek AI model hits tech shares; US Futures Stabilize After Sharp Selloff

And now…

⏱️ Your 5-minute briefing for Tuesday, January 28, 2025:

MARKET BRIEF
Before the Open

As of market close 01/27/2025.

Pre-Market

  • Apple's shares rose 3.2% Monday, among the best performers on the Nasdaq and the Dow.

  • Chip-making giant Nvidia's

    shares tumbled nearly 17% Monday, the worst performer on the Dow and among the worst on the Nasdaq.

Fear & Greed

 

Markets in Review

Nasdaq Slumps as Chinese AI Challenger Sends Ripples Through Tech

The Nasdaq Composite slid 3.3% to 19,292.2 intraday Monday, with the S&P 500 down 1.8% to 5,989.5. The Dow Jones Industrial Average rose 0.3% to 44,550.4, buoyed by consumer staples.

The Big Picture:

US technology stocks faced heavy pressure as China's DeepSeek unveiled an AI model poised to rival industry giants like Meta’s (META) Llama 3.1 and Microsoft-backed OpenAI’s ChatGPT. The announcement stirred fears of heightened competition in the burgeoning AI space.

Shares of chipmakers and AI-focused companies bore the brunt, while consumer staples and telecom outperformed, offering a safe harbor amid the volatility. The tech sector dropped 6%, leading market declines, while utilities fell 3.1%.

West Texas Intermediate crude oil dropped 2.4% to $72.84/barrel. Gold slipped 1.4% to $2,739.30/oz, while silver lost 2.2%, settling at $30.50/oz.

Market Movers:

  • AT&T (T): Shares surged 7.2%, topping the S&P 500, after delivering better-than-expected Q4 results and reiterating its 2025 earnings outlook.

  • Apple (AAPL): Gained 3.9%, the best on the Nasdaq, as DeepSeek’s app overtook ChatGPT as the top-rated free app on its App Store.

  • Nvidia (NVDA): Plunged 17%, leading losses on the Dow, as competition concerns weighed heavily on sentiment.

  • Broadcom (AVGO): Tumbled 19%, the steepest decline on the Nasdaq, amid fears of eroding market dominance in AI-related chip demand.

What They’re Saying:

"DeepSeek's emergence signals intensifying competition in AI, and markets are grappling with how incumbents will defend their edge," said a Wedbush analyst.

WHAT WE’RE WATCHING
Events

  • Today: The Conference Board Inc. - The Conference Board (CB) Consumer Confidence - 10:00am

  • Why You Should Care: Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity

Earnings Reports

  • Today: Starbucks, Boeing, General Motors, Kimberly-Clark, Logitech, Royal Caribbean Cruises

  • Tomorrow: Microsoft, Meta, Tesla, T-Mobile, Progressive, Waste Management, IBM, Nasdaq

MARKET BRIEF
Leading News

When AI Giants Stumble: Your Buying Opportunity or Behavioral Trap?

Why it matters:

The largest single-day market cap loss in U.S. history offers a stark reminder that even the hottest tech trends aren't immune to gravity – and might present a compelling entry point for long-term investors.

Zoom Out:

After a breathtaking 239% gain in 2023 and 171% surge in 2024, Nvidia ($NVDA) was due for what Benjamin Graham would call a "return to reason." The catalyst? A Chinese AI upstart called DeepSeek demonstrated it could build competitive AI models using cheaper chips, rattling the market's conviction in Nvidia's AI monopoly.

But let's maintain perspective: This isn't 2000's dot-com bubble. Nvidia's fundamentals remain robust, with real earnings and dominant market share in AI computing. The selloff represents more of a valuation reset than a structural crack in the AI thesis.

Key Insights:

  • Competition reality check: DeepSeek built its model for $6M using lower-spec Nvidia chips – proving both the threat of competition and Nvidia's embedded position in the AI stack

  • Follow the money: Major tech giants (GOOGL, META, AMZN) continue pouring billions into AI infrastructure, suggesting the spending super-cycle remains intact

  • Ripple effects: The selloff hit the entire AI ecosystem, creating potential opportunities in quality names like Super Micro Computer ($SMCI) and Dell ($DELL)

Market Pulse:

"We think this view is farthest from the truth" - Cantor analysts on fears of peak GPU demand, noting AI advancement typically drives increased compute needs.

Bull’s Take:

History suggests transformative technology waves create multiple winners, not zero-sum games. For patient investors, this correction might offer an opportunity to build positions in the AI infrastructure players that will power the next decade of computing evolution – at more reasonable valuations. The best returns often come from buying premier companies when others are panic-selling. Just ensure your position sizing reflects both the opportunity and the volatility inherent in transformative tech trends.

Headlines

  • Big Tech faces heat as China's DeepSeek sows doubts on billion-dollar spending (link)

  • SoFi’s stock sinks as a downbeat outlook negates a big revenue beat (link)

  • Pfizer proxy fight averted as Starboard stands down, for now (link)

  • Amazon taps Whole Foods CEO to oversee grocery business (link)

  • AT&T's bundled 5G, fiber plans boost quarterly subscriptions; shares rise (link)

  • Oracle, Super Micro Pummeled in Rout of AI Infrastructure Stocks (link)

CRYPTO
Fear & Greed

 

Headlines

  • Trump's Treasury Secretary Bessent Approved, Likely Tackling Taxes Before Crypto (link)

  • Bitcoin's DeepSeek-Triggered Selloff Is a Buy the Dip Opportunity, Analysts Say (link)

  • AI-focused bitcoin miners Core Scientific, Cipher Mining hit hardest in crypto stock sell-off (link)

DAILY SHARE
On the Socials

*Hat-tip to rileycollins_