What Happened to NVIDIA and Broadcom Stock This Week?

Written By Finn Price

Earlier this week, NVIDIA and Broadcom stocks took a hit, causing market ripples across the AI and semiconductor sectors. Both companies have been at the forefront of the AI boom over the past few years, benefiting from strong demand for advanced chips. However, this week, concerns over competition and market valuation triggered a sharp sell-off.

Key Events Driving the Decline

1. DeepSeek’s AI Model Announcement

A major catalyst for NVIDIA’s drop was the announcement from DeepSeek, a Chinese AI startup, which introduced an AI model that claims to match the performance of U.S. leaders like OpenAI and Google DeepMind—at a fraction of the cost. Investors saw this as a potential long-term threat to NVIDIA’s dominance in AI chips, leading to heavy selling.

  • Impact on NVIDIA: The stock fell nearly 17% in just a few days, wiping out around $589 billion in market value—one of the largest drops in history. This had a big effect on employees who own company stock & stock options. [read more about NVIDIA employee wealth]

  • Impact on Broadcom: As a key supplier of AI infrastructure, Broadcom was also affected, though to a lesser extent. The stock declined as investors reassessed demand projections.

2. Broader AI Stock Volatility

The sell-off wasn’t just about DeepSeek. The AI sector has been on an incredible run, and many investors were sitting on massive gains. The recent drop may have been partially due to profit-taking, with traders locking in gains from NVIDIA’s 2023-2024 rally.

  • AI stocks like Super Micro and AMD also dropped, indicating that the sector as a whole was facing downward pressure.

  • The NASDAQ-100 briefly turned negative, weighed down by NVIDIA's decline.

  • At the end of the day, “Trees do not grow to the sky” and “Rebalance or the market will do it for you.” These kinds of pullbacks are normal, and after the run that the MAG7 has had, this was expected.

3. Analysts’ Take: Is This a Buying Opportunity?

Despite the sell-off, some analysts see this as a natural pullback rather than the start of a long-term decline.

  • Bullish case: The AI market is still in its early stages, and NVIDIA remains the undisputed leader in high-performance AI chips. Some analysts argue that NVIDIA’s dominance in AI hardware won’t fade anytime soon. A big argument is that NVIDIA is actually growing revenue very quickly. Even with recent growth in the stock price, as they release earnings/profits, their P/E ratio actually reduces to lower valuation levels.

  • Bearish case: The stock had become highly concentrated in investor portfolios, making it vulnerable to sharp corrections. If AI competition heats up, NVIDIA’s profit margins could come under pressure.

What This Means for Investors

  • Short-term traders saw heavy volatility, but long-term investors are watching for signs of stabilization.

  • Broadcom's decline suggests that AI infrastructure providers may also see more competition in the future.

  • AI competition is heating up, but the market is far from settled. The coming months will be key in determining whether this was just a temporary pullback or the start of a deeper correction.

For now, NVIDIA remains the biggest player in AI chips, but this week was a reminder that no stock moves up in a straight line.

Visit my site -> finnprice.com

Business Owner Education on a Weekly Basis -> Newsletter

Subscribe to the Youtube Channel for more video content -> Finn Price Youtube

About the author: Finn Price, CPFA, CEPA, is a business owner and wealth manager at Railroad Investment Group. He helps successful entrepreneurs & individuals with concentrated stock positions in their 30s, 40s and 50s build, organize, protect and transfer their wealth.

Note: this article is general guidance and education, not advice. Consult your money person or your attorney for financial, tax, and legal advice specific to your situation.

Securities and advisory services offered through LPL Financial, a registered investment Advisor, Member FINRA/SIPC.

Additional Sources:

  • https://www.investopedia.com/nvidia-stock-drops-wednesday-as-ai-chipmaker-roller-coaster-week-continues-8782483?utm_source=chatgpt.com

  • https://nypost.com/2025/01/27/business/nvidia-stock-set-for-record-wipeout-on-deepseek-fears-ceo-jensen-huangs-net-worth-tanks/?utm_source=chatgpt.com

  • https://www.reuters.com/technology/artificial-intelligence/ai-stock-shock-could-spark-broader-gains-us-market-2025-01-29/?utm_source=chatgpt.com

Finn Price
Next

Consumers Say “Long Live the Bull Market”