Nvidia, Broadcom Stocks Tumble Pre-Market As DeepSeek’s Arrival Sparks Fears Of AI Bubble Burst: Retail Turns Extremely Bearish

Shares of Nvidia Corp. (NVDA), Taiwan Semiconductor Manufacturing Co. (TSM), Broadcom Inc. (AVGO), and other semiconductor companies fell in pre-market trade on Monday as Chinese AI startup DeepSeek’s open-source model threatened the hegemony of industry leader OpenAI.

At the time of writing, Nvidia stock price was down more than 11% during pre-market trade, while TSMC and Broadcom stocks were down more than 10%. Arm Holdings Plc. (ARM) and ASML Holdings NV (ASML) stocks fell more than 7%.

The rout in AI stocks also spilled over to the broader markets, with the Nasdaq 100 index futures tumbling 3.6% at the time of writing.

DeepSeek, funded by the Chinese hedge fund High-Flyer, was founded by Liang Wenfeng in Hangzhou, Zhejiang. Its R1 large language model is said to match the performance of OpenAI’s o1 across math, code, and reasoning.

The biggest takeaway is DeepSeek-R1’s computing and cost requirements – it is said to consume 97% less computing power, allowing the company to work around the U.S. government’s restrictions on the export of high-end AI chips to China.

It also costs 50 times less compared to OpenAI’s models.

Retail sentiment on Stocktwits for Nvidia stock turned ‘extremely bearish’ (21/100) from ‘bearish’ (35/100) a day ago.

NVDA sentiment and message volume January 27, 2025, as of 8 am ET | Source: Stocktwits

For TSMC stock, the sentiment meter remained in the ‘neutral’ (47/100) territory.

TSM sentiment and message volume January 27, 2025, as of 8 am ET | Source: Stocktwits

At the same time, ARM stock drew a ‘bearish’ (43/100) take by retail investors on Stocktwits.

ARM sentiment and message volume January 27, 2025, as of 8 am ET | Source: Stocktwits

Nvidia’s stock price has had a slow start to 2025, gaining a little over 3% year-to-date, while Broadcom has gained nearly 5.5%.

TSMC’s stock price has gained over 10% in 2025 so far. On the other hand, Arm’s stock has gained over 26% year-to-date.

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