Nvidia plunged ~17% overnight as the emergence of DeepSeek posed valuation concerns to the $US2.9 trillion Californian-based AI behemoth. The emergence of the Chinese start-up has possibly made a competitive AI model for a fraction of the billions Silicon Valley is spending, leading investors to adopt an “if in doubt, get out approach” amplified by the huge amount of momentum money that had found its way into the stock pushing valuations for technology in general and for semiconductors in particular to stretched levels. However, the stampede for the exits has already taken NVDA’s valuation down to more appealing levels, which gets our attention, but given the volume of speculative money that has come into the stock over the past few years, this “crowded trade” could take a while to unwind.
- We can see NVDA trading below $US100 in the coming months; hence, it feels too early to catch the falling knife – though we are watching closely.
