“A warning”: after a historic fall, Nvidia rebounds on the stock market

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Things are moving very quickly in the stock market, but the historic fall in Nvidia's stock on Monday, January 27, should nevertheless leave its mark. The tech giant has indeed suffered a massive drop of $559 billion in its capitalization. However, yesterday, the company's share price recovered. Let's take stock.

The DeepSeek effect

There's no point beating around the bush, it's the emergence of the Chinese generative AI DeepSeek that has instilled a wave of panic on Wall Street and in Silicon Valley. The idea of ​​seeing a model trained for less than $10 million indeed shakes the expensive strategy of Uncle Sam's technology companies based on the accumulation of cutting-edge electronic chips and data to design these technologies.

This is precisely the opinion of Shaniel Ramjee, co-director of multi-assets at Pictet Asset Management: “While the historical players seemed to build ever-widening moats around their capacities, this new development calls into question this idea.”

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A rebound this Tuesday

But this Tuesday, January 28 and after a significant rout, Nvidia recovered by almost 9%. At the same time, the markets seem to have calmed down. The benchmark S&P 500 index gained 0.9%, while the Nasdaq, which houses digital companies, gained 2%.

What exactly happened? Quoted by the Financial Times, Timothy Arcuri, an analyst at UBS, comments: “The magnitude of the moves in stocks like Nvidia, Broadcom and Marvell (on Monday) seems overblown to us and can generally look like a buying opportunity in hindsight, once the dust has settled.”

But Monday shouldn't be dismissed as a blip. That's the view of Guy Miller, chief market strategist at insurer Zurich: “Investors were reminded that even technology stocks need to have a risk premium. It is a salutary reminder that nothing in markets, or in technological development, is a straight line.”.

As always in this matter, we will therefore refrain from drawing any definitive conclusions. The share price of tech giants like Nvidia will be influenced by many factors, including its financial results, but also announcements from competitors and investors' vision of its future.

What to remember:

• Nvidia's share price fell sharply on Monday following the presentation of DeepSeek AI
• The share price rebounded by 9% on Tuesday
• The crash at the start of the week remains a warning for all investors

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