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💣 Why a New AI Threat Cratered Nvidia Stock
Plus, why broader circumstances may still be positive, and more
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Happy Tuesday! Nvidia's plunge below its 200-day moving average signals a historic shakeup, with DeepSeek's rise sparking fears over demand for premium AI chips. Understand the implications of this seismic shift — and how it could reshape tech market dynamics. Also, read why the overall framework could be positive.
—Josh Enomoto
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MARKET RECAP
Yesterday: Stocks declined Monday, with the Nasdaq dropping over 3% as concerns over competition from Chinese AI startup DeepSeek weighed on technology shares. Treasury yields fell to their lowest of the year, while the VIX spiked over 18%, reflecting heightened market volatility. Investors are now focusing on upcoming earnings from major tech players to gauge the sector's resilience amid increased global competition.
On Our Radar: After reviewing durable goods data, analysts will next turn to the consumer confidence report. On the earnings front, coffeehouse Starbucks is scheduled to release its results after Tuesday’s closing bell.
TOP STORY
Nvidia's historic selloff highlights growing concerns about competition from DeepSeek, a Chinese AI platform that challenges the demand for high-end chips.
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FIVE ZINGERS
Still Splendid: Nvidia wasn't the only enterprise hurting, with the Magnificent Seven suffering badly. Still, here's why one analyst isn't deterred by the blood on the Street.
Faux Pas: Shares of EV maker Tesla fell on Monday amid controversial remarks by CEO Elon Musk. At a far-right rally, Musk downplayed Germany's post-war reconciliatory path, leading to sharp criticism.
Exit Door: Shares of Fannie Mae and Freddie Mac slipped on Monday following an analyst downgrade to Underperform. Read about the "considerable risk" that these mortgage specialists face.
No Go: Investor Cathie Wood passed on the opportunity to bid up the meme coin Official Trump. Discover the sentiment split of this popular but controversial digital asset.
Trimmed Outlook: While SoFi Technologies posted better-than-expected Q4 results, its earnings guidance for this year disappointed. Learn how management is framing the discussion here.
SPECIAL OFFER
Editor’s Note: Every week, Benzinga Edge members receive the Insider Report. It’s a rundown of what to expect from the markets in the week to come, which sectors are outperforming and why, and most importantly, a selection of hand-picked stocks that are poised to move up because of that week’s trends. Here’s a sneak peek:
Believe it or not, the World Economic Forum at Davos took place last week. But it seems like this event was eclipsed by economic and political developments taking place in the United States. For many years, we heard the phrase, "New World Order," but it sure seems like another one is coming upon us from an entirely new direction.
I wouldn't be surprised to see a complete realignment of the power blocks in Europe especially. I think this makes the Euro particularly vulnerable to sustained weakness against the Dollar in the long-run, even though we'll probably see the Dollar come back down in the near-term.
This creates a goldilocks scenario for the coming months – if inflation is contained, energy prices are down, and interest rates drop, I would look for stocks to further compound their impressive gains from the past couple of years. And it's unlikely to just be in the U.S. either – more on this below.
To keep reading and to find out how investors can prepare for continued strength in the greenback, sign up for Benzinga Edge here.
SPECIAL OFFER
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