VOO Market Crash: Live Updates on NVIDIA (NVDA), Vista (VST), and Broadcom (AVGO)

Investing

Published: January 27, 2025 3:19 pm

Well, we’re entering the final hour of Monday trading now, and I’m afraid the news isn’t getting much better.

“Thanks” primarily to the news that Chinese AI start-up DeepSeek has developed a new large language model that’s apparently as good as ChatGPT, but cost only a small fraction to build (reportedly as little as $6 million), shares of formerly tech stocks like Nvidia (Nasdaq: NVDA) and Broadcom (Nasdaq: AVGO), as well as power utilities like Vistra (NYSE: VST), have all gone from “red hot” to deeply “in the red.”

As of 2:45 p.m. ET, Nvidia stock has lost a staggering 17.5% of its formerly $3.5 trillion market cap. Broadcom shares are doing even worse, losing 17.9%, and poor Vistra is doing worst of all, with a walloping loss of 29%!

Key Points

AI stocks sold off Monday on worries that a new Chinese artificial intelligence large language model will undermine demand for US AI stocks.
The broader S&P 500 is only down less than 2%.
Bargains may emerge as falling AI stock prices force investors to sell other, less expensive stocks.
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So what

But here’s the thing. Considering the dominance tech stocks play in today’s market, and the outsized influence that “AI stocks” in particular had in driving the S&P 500 up 23% last year, you might think that the whole stock market is literally melting down today.

It isn’t.

The Vanguard S&P 500 ETF (NYSEMKT: VOO) that represents the value of America’s 500 biggest stocks, is down only 1.8%. That’s statistically significant. But it’s hardly a meltdown. Most stocks today, in fact, are doing just fine.

Now what

In fact, if you asked Warren Buffett, I think he’d very likely point out that what’s happening today is that a lot of people are fearful, and that perhaps this is a clue that you might want to get a bit greedy.

Mind you, I wouldn’t necessarily get too greedy about the specific stocks that everyone’s fearful of today. A lot of AI stocks did get bid up to ridiculous levels in last year’s galloping market. Thinking it was reasonable to pay 31 times sales to own a piece of Nvidia might actually have been a bit irrationally exuberant, and paying 23 times to own Broadcom not much better.

But there are plenty of other stocks in the sea. And if today’s market selloff in AI stocks works like other selloffs I’ve seen, we could very likely see good stocks, at good prices, get sold to cover margin calls on other stocks (i.e. AI stocks) that traders are being forced to cover because of their falling prices.

The more babies that get thrown out with today’s bathwater, the greater the chance we’ll see some good bargains to buy tomorrow.

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