OP Wire 1/28 (OP – Lite)

Nasdaq Futures Rebound as AI Drama Unfolds

The Nasdaq futures rose Tuesday after a sharp tech sell-off on Monday, driven by concerns over the impact of Chinese AI firm DeepSeek’s low-cost model on Big Tech’s spending strategies. By 03:20 ET, Nasdaq futures were up 55 points (0.3%), while the S&P 500 was flat and Dow futures dipped 96 points (0.2%).

Shares of Nvidia (NASDAQ: NVDA) edged higher in premarket trading, clawing back some of the ground lost after its record 16.8% plunge on Monday, wiping out nearly $600 billion in market value. The Nasdaq Composite fell 3.1%, with the S&P 500 dropping 1.5%.

The sell-off wasn’t limited to Nvidia. Other chipmakers and AI-adjacent companies like power utilities Vistra (NYSE: VST) and Constellation Energy (NASDAQ: CEG) also slid. Data center infrastructure builders such as Vertiv Holdings (NYSE: VRT) suffered heavily, falling over 30%.

DeepSeek Shakes AI Spending Confidence

DeepSeek, a Chinese start-up, sent shockwaves through the market with its claim to have developed a rival AI chatbot to OpenAI’s ChatGPT at a fraction of the cost. Using Nvidia’s H800 chips, DeepSeek reportedly built its model for under $6 million in just two months. The chatbot surged to the top of Apple’s (NASDAQ: AAPL) App Store on Monday, overtaking ChatGPT.

OpenAI CEO Sam Altman called DeepSeek’s model “impressive,” but the news sparked doubts about whether Big Tech’s massive AI investments are justified. Analysts warn that DeepSeek’s innovation could disrupt the inflated expectations fueling AI-related stock rallies.

Analysts Weigh In

• Morgan Stanley cut its price targets for Nvidia and Broadcom, citing “evolutionary” AI innovations like DeepSeek’s, some of which could have deflationary effects. While the analyst noted Monday’s reaction was “surprising,” they remain positive on semiconductor stocks.
• RBC Capital increased its price target for AT&T (NYSE: T) to $27, citing stronger-than-expected Q4 wireless and fiber net additions.
• Morgan Stanley raised its price target for Affirm (NASDAQ: AFRM) to $55, highlighting its key partnerships with Amazon and Shopify and potential progress toward obtaining an industrial loan company license.

Market Outlook

Beyond DeepSeek’s disruption, investors are eyeing upcoming U.S. tech earnings and the Federal Reserve’s Wednesday decision, with rates expected to remain steady.

Stay tuned for updates and analysis as these developments unfold. For more insights, visit OptionsPlayers.com—where we help you Stack Your Gains.

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