Nvidia experienced a historic market value loss of $589 billion on Monday, marking the steepest single-day decline in market-value history as shares plummeted 17%. The sell-off was triggered by concerns surrounding DeepSeek, a Chinese AI startup that has challenged Wall Street’s assumptions about the AI trade and the necessity of expensive, high-powered chips for AI development.
Despite the dramatic downturn, retail investors demonstrated unwavering confidence in the AI chipmaker, purchasing a record-breaking $562 million worth of Nvidia shares on Monday alone—the largest single-day retail inflow in at least a decade according to VandaTrack data. The buying spree continued Tuesday with an additional $921 million in net purchases, bringing the two-day total to nearly $1.5 billion in retail investment.
Retail traders interviewed by Business Insider uniformly expressed their intention to “buy the dip” and maintain long-term positions in Nvidia. Shade Gotau, who began investing in Nvidia in 2023, called the decline a “prime opportunity” and plans to continue purchasing shares monthly. Kiana Danial, a veteran Nvidia investor since 2016, drew parallels to the 2022 bear market when shares dropped 50%, emphasizing that “long-term investors should not get shaken by temporary market hiccups.”
Many retail investors questioned DeepSeek’s competitive threat, noting that the Chinese startup’s AI model was trained on older, less powerful Nvidia chips. Kaihan Toofan called DeepSeek’s challenge “laughable,” arguing that established players have invested billions in research and development over years. Chris D., a long-term investor, pointed out that “Nvidia is booked solid for quarters on their orders,” suggesting the company’s dominance remains intact.
The stock partially recovered on Tuesday, rising approximately 9%, though it declined nearly 5% on Wednesday afternoon. Despite the volatility, Nvidia has risen 2,000% over the past five years and gained 176% in 2024 alone, cementing its position as the poster child of the AI boom. Wall Street analysts like Wedbush Securities’ Dan Ives maintained their bullish stance, stating that “there is only one chip company in the world launching autonomous, robotics, and broader AI use cases and that is Nvidia.”
Key Quotes
The recent market sell-off didn’t shake my confidence. If the stock continues to dip, I’ll be there to buy.
Shade Gotau, a retail trader who began investing in Nvidia in 2023, expressed her long-term commitment to the chipmaker despite the historic single-day loss, viewing the decline as a buying opportunity rather than a reason for concern.
All that’s to say, long-term investors should not get shaken by temporary market hiccups like this. I bought more. I am planning to buy more.
Kiana Danial, who has been investing in Nvidia since 2016, compared the current situation to the 2022 bear market when shares dropped 50%, emphasizing that volatility is normal and shouldn’t deter committed investors from their strategy.
At the end of the day there is only one chip company in the world launching autonomous, robotics, and broader AI use cases and that is Nvidia.
Dan Ives, analyst at Wedbush Securities, maintained his bullish stance on Nvidia following the sell-off, arguing that DeepSeek’s emergence doesn’t fundamentally change the company’s unique position in AI infrastructure development.
They’re stepping into a battlefield dominated by giants who have been promoting and refining AI technologies for years, pouring billions into research and development. Their efforts seem amateurish at best.
Kaihan Toofan, a retail Nvidia trader, dismissed DeepSeek’s competitive threat, emphasizing the vast resource and experience advantages held by established US AI companies over the Chinese startup.
Our Take
The retail investor response to Nvidia’s historic decline reveals a fascinating psychological and strategic divergence from institutional behavior. While hedge funds and institutional investors reacted with panic to DeepSeek’s efficiency claims, retail traders demonstrated remarkable conviction, treating the sell-off as a discount opportunity rather than a fundamental threat. This suggests that retail investors may be taking a longer-term view of AI infrastructure demand, betting that regardless of efficiency improvements, the proliferation of AI applications will drive sustained chip demand. Their skepticism about DeepSeek’s claims—questioning whether the Chinese startup’s reported efficiency gains are verifiable and sustainable—also reflects a more nuanced understanding of competitive dynamics than the market’s knee-jerk reaction suggested. The record-breaking buying activity may prove prescient if Nvidia’s order backlog and technological moat remain intact, or it could represent overconfidence in a market facing genuine disruption.
Why This Matters
This story represents a critical stress test for the AI investment thesis that has driven unprecedented market gains over the past two years. DeepSeek’s emergence challenges the assumption that AI development requires massive capital expenditure on cutting-edge hardware, potentially disrupting the economics of the AI boom. If cheaper, more efficient AI models can achieve comparable results, it could fundamentally reshape the competitive landscape and investment flows in the technology sector.
However, the retail investor response reveals deep-seated confidence in Nvidia’s long-term dominance despite short-term volatility. The record-breaking buying activity suggests that many investors view AI infrastructure as essential regardless of efficiency improvements, and that Nvidia’s technological lead, manufacturing capacity, and ecosystem advantages create durable competitive moats. This divergence between institutional panic and retail conviction highlights different time horizons and risk assessments in evaluating the AI market. The outcome will significantly impact not just Nvidia’s trajectory but the broader narrative around AI investment, chip manufacturing sovereignty, and the balance of technological power between the US and China.
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