Traders work on the floor of the New York Stock Exchange at the opening bell on Jan. 27, 2025.
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All eyes were on Nvidia in Tuesday's trading with the major averages moving instep with the AI bull market leader's intraday fluctuations. The stock picked up momentum to rise 7% in afternoon trading after briefly seeing losses earlier in the session.
In the prior session, Nvidia lost 17%, or almost $600 billion in market value — the biggest ever one-day drop in value for a U.S. company. Tech peers Broadcom and Oracle similarly rose 3% each following steep losses Monday.
NVDA, 1-day
The DeepSeek AI threat came to a head on Monday following social media buzz over the weekend. The Chinese startup last month unveiled a free open-source large language model that it says took less than $6 million to build. The development spurred worries around Big Tech's investment into AI that's been fueling the run in chipmakers, primarily Nvidia. DeepSeek, which is open-sourced and supposedly powered by a chip set-up that costs a fraction of other leading AI models, surpassed rival OpenAI on Monday to become the most-downloaded free app in the U.S. on Apple's App Store.
Investors hoped for Nvidia to remain in the green to shore up confidence in the AI trade, which has lifted not only shares of chipmakers in the last year, but also far-reaching parts of the market like power producers. While Nvidia was in the green on Tuesday, Thomas Martin of GLOBALT Investments says that investors should still watch their backs.
"I don't think we're in the clear necessarily. I think that we're [in] a bit of uncertainty as people try to sort this out," the senior portfolio manager told CNBC. "I believe that the theme about needing more … power for processing, data centers, etc., is still intact, but confidence has been shaken."
Investors' attention is turning toward corporate earnings due this week. A slate of Magnificent Seven companies will report in the coming days, with Meta Platforms, Microsoft, Tesla and Apple due later this week.
The Federal Reserve will also make its latest decision on interest rates Wednesday. Wall Street believes it's a near certainty that the central bank will halt its rate-cutting campaign and keep rates steady this week. What's not known is how many rate cuts Fed chief Jerome Powell will signal are in the cards for this year.
