Despite the publication of a Chinese artificial intelligence model that damaged Nvidia’s stock and resulted in an unprecedented $600 billion decline in market value, retail investors flocked to the chipmaker on Monday, indicating Main Street support for the company.
Vanda Research data, which deducts total outflows from inflows, shows that on balance Monday, daily traders purchased more than $562 million worth of Nvidia shares. As institutional investors dumped the stock in large quantities, mom-and-pop investors bucked them, setting a record for daily net inflows into Nvidia.
Individual support arrived as Nvidia saw its largest one-day drop since the start of the Covid outbreak in March 2020, plunging over 17%.
The announcement that an AI model from the Chinese startup DeepSeek obtained outstanding performance marks more affordably and in a far shorter amount of time than its Western equivalents caused Monday’s decline.
As President Donald Trump launched a multi-billion dollar AI project named Stargate last week, the event cast doubt on the U.S. policy of spending enormous sums of money on AI and the data centers they require. In addition to raising concerns that America would not be at the forefront of AI technology, DeepSeek’s explosive rise served as a terrifying reminder of what some have called a Sputnik moment at the start of the Space Race.
On Monday, Nvidiat informed CNBC that DeepSeek’s model was a superb development in artificial intelligence. According to reports, DeepSeek’s product performed better than the top models from OpenAI and other American rivals, raising more questions about the United States’ standing in AI.
Individual investors, however, remained unconcerned. According to data from Vanda, the chipmaker was the security that ordinary investors bought the most of in 2024, outperforming even the S&P 500-tracking SPDR S&P 500 ETF Trust (SPY).
Nirav Patel was one of the purchasers on Monday. According to the technology manager, he tested DeepSeek’s model for hours and came to the conclusion that, even though development costs have decreased, more chips will be required to meet the rise in demand that should come with rising affordability.
Patel predicted that the use of reasoning AI models will increase significantly. As adoption increases, more processing power is required, which essentially means more Nvidia chips.
Similar to the meme stock frenzy that enthralled U.S. markets during the epidemic, the display of support from small-scale traders is the most recent instance of individual investors deviating from Wall Street’s monolithic structure. The difference is that, unlike small-cap stocks like video game retailer GameStop or movie theater chain AMC four years ago, people can no longer influence the price of Nvidia, which had a market value on Tuesday close to $3 trillion.
On Monday, however, the overtones were comparable despite the huge difference. According to Quiver Quantitative statistics as of Tuesday morning, Nvidia was the most-mentioned stock on the well-known WallStreetBets Reddit thread over the previous 24 hours, with mentions rising by more than 175% as its price fell.
In reference to Nvidia CEO Jensen Huang, a Reddit user posted a picture of their Nvidia stake on the WallStreetBets thread with the caption, “in Huang we trust.” Monday’s actions, according to another, were a classic overreaction that failed to consider the wider picture.
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