- Nvidia set for 5%-plus recovery when Wall Street reopens
- Broadcom, AMD, TSMC also set to regain some lost ground
- Valuable reminder to investors that stocks do not always go up
The tech bloodbath on Wall Street overnight looks like a short, sharp shock often needed when markets get over exuberant. Pre-market data shows the S&P 500 and Nasdaq 100 futures both making modest gains as investors reset expectations in the wake of China’s DeepSeek AI prompting huge debate on the state of global AI infrastructure and whether yesterday’s hot stocks can stay ahead in the future.
How Chinese hedge fund-backed DeepSeek reshapes the AI space long-term remains a question without a firm answer as it stands, but investors appear willing to back leaders again today, with Nvidia (NVDA:NASDAQ), Broadcom (AVGO:NASDAQ) and Advanced Micro Devices (AMD:NASDAQ) poised to recover some of the losses from Monday’s sharp sell-off.
Nvidia shares jumped nearly 5%, while Broadcom climbed 4% and AMD added 1.6%. Other semiconductor stocks are also expected to see some sort of recovery when Wall Street reopens later today, such as Micron Technology (MU:NASDAQ) (+2.3%), TSMC (TSM:NYSE) (+3.3%), and Marvell Technology (MRVL:NASDAQ) advancing (+3.7%).
S&P 500 and Nasdaq 100 futures are seen making +0.4% and +0.7% gains.
NVIDIA BACK TO OCTOBER 2024 LEVELS
Nvidia posted its worst ever one-day decline overnight, crashing nearly 17%, ‘which sounds dramatic but only pulled the stock back to October 2024 levels’, said AJ Bell investment director Russ Mould.
Someone who has owned Nvidia shares since before summer last year should still be sitting on decent gains, even after yesterday’s pullback.
‘The DeepSeek shock has reminded investors they cannot be complacent when trying to play the AI trend. Stocks do not travel in unison and neither do they always travel upwards’, said Mould. ‘Sometimes it’s good to be reminded of this. Valuations have been getting lofty in the tech space and investors need to appreciate that richly priced stocks can fall hard on the slightest bit of bad news.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Steven Frazer) and the editor (Martin Gamble) own shares in AJ Bell.
