JAKARTA Tech stocks in the United States recovered on Tuesday, January 28, following a major loss the day before due to the launch of DeepSeek, China's AI assistant. Nvidia, the leader of the AI chip market, closed up 8.9% after previously recording a 17% drop on Monday, January 27, which is the largest one-day loss record in the company's history, removing nearly $593 billion (IDR 9.6 quadrillion) from its market cap.
Nvidia's losses also have an impact on the global technology sector, with semiconductor companies, energy and infrastructure related to AI losing a total value of more than US$1 trillion (Rp16.2 quadrillion) in one day.
The trigger for the big decline was the launch of DeepSek, an AI assistant that is claimed to require far less data and much lower costs than today's technology. Despite global attention, DeepSek's cost efficiency claims remain doubtful.
However, on Tuesday, the overall technology sector (SPLRCT) rose 3.6%, removing some of the 5.6% losses from the previous day. Philadelphia's semiconductor index (SOX) also increased 1.1% after recording a 9.2% drop on Monday, the deepest one-day drop since March 2020.
"Yesterday's reaction was an initial response. Today, investors are starting to question whether there is concrete evidence that DeepSek can really be built at a much lower cost," said JJ Kinahan, president of the tasktrade brokerage in Chicago.
Investor Reaction
OpenAI CEO Sam Altman called DeepSek an "amazing" model and stated that this new competition is encouraging to continue to grow. "We will present a much better model, and the presence of this new competitor is really refreshing," Altman said in a post on social media.
Meanwhile, US President Donald Trump called DeepSek a "warning for our industry" to increase innovation.
Although DeepSek rocked the market, analysts like the Cody Acree of Benchmark Company believe that cheap AI models like DeepSek will not replace the needs of high-performance chips that remain important in the AI ecosystem.
Opportunities And Challenges In The Technology Sector
Nvidia's recovery on Tuesday put its share price at 128.99 US dollars, still well below Friday's closing of US$142.62. Other major tech companies, such as Oracle and Marvell Technology, also recorded an increase of 3.6% and 3.5% respectively after a previous sharp decline.
Apart from Nvidia, Broadcom shares also rose 2.6% on Tuesday after a 17.4% decline the previous day. On the other hand, European semiconductor companies such as ASML still experienced a nearly 1% decline on Tuesday after losing 6% on Monday.
BACA JUGA:
Data shows that retail investors took advantage of a large drop in Nvidia to buy shares of the company, with net purchases hitting a record $562.2 million on Monday. According to data from JP Morgan, orders purchased from retail investors exceeded the sell order with a ratio of 2:1.
The AI hype and the Technology Sector Market Concentration remain the main attraction of investors, with the "Magnificent Seven" technology companies, including Nvidia, Microsoft, and Apple, experiencing an increase in market value of 10 trillion US dollars since the emergence of ChatGPT in November 2022.
However, volatility recently reminded investors of the risk of high capital concentration in a small number of companies traded with premium valuations. Prior to Monday's decline, Nvidia's shares traded nearly 60 times the profit value, compared to an average of 22 for the S&P 500 index.
Several major tech companies, such as Apple and Microsoft, are scheduled to report financial results this week. Investors are expected to ask about the capital expenditure strategy and how they face competition in the AI sector.
Despite being hit by volatility, momentum in the technology sector shows that global competition in AI innovation will continue to be the main driver of stock markets and industrial developments in the future.
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