AI chipmaker Nvidia has been on an amazing upward trajectory for the past few years. It finally faltered after China startup DeepSeek introduced new AI technology: a free, open-source large language model platform.
With AI continuing to be a hot topic, any news in technological advancements can certainly sway the markets. In the case of Nvidia, news of DeepSeek certainly shook investors and triggered a major sell-off that pounded the chip sector and technology in general. With DeepSeek based in China, this could challenge the competitiveness of its American counterparts and
“DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling,” an Nvidia spokesperson said via a CNBC report. “DeepSeek’s work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant. Inference requires significant numbers of NVIDIA GPUs and high-performance networking. We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling.”
If DeepSeek looks like it may gobble up market share from the biggest players in the semiconductor industry, traders may want to look at the Direxion Daily NVDA Bear 1X Shares (NVDD ) and the Direxion Daily TSM Bear 1X Shares (TSMZ ). Both funds offer bearish positions in Nvidia and Taiwan Semiconductor, respectively.
Buying-the-Dip Opportunities
While the initial news of DeepSeek may have triggered a fear trade, some market experts think the jury is still out on the startup. When sell-offs are taking place, a trader can get easily ensnared into dumping their existing positions, but patience can reward disciplined traders.
“I have no view on DeepSeek yet, because we just don’t know enough. Sometimes, you have to do the hardest thing in the world,” said CNBC personality and host of “Mad Money” Jim Cramer. “We got to wait, we got to wait until we know more, rather than taking kneejerk action and pretending that we know the answers.”
When the initial sell-off subsides, traders can always get back on the bullish trend with the Direxion Daily NVDA Bull 2X Shares (NVDU ) and the Direxion Daily TSM Bull 2X Shares (TSMX ). They can offer an ideal “buy the dip” trade
If traders don’t want to single out one stock individually, they can always trade the entire semiconductor sector. That’s available with the Direxion Daily Semiconductor Bull 3X Shares (SOXL ) and the Direxion Daily Semiconductor Bull 3X Shares (SOXS ). Both funds provide three times exposure to the biggest companies in the semiconductor industry.
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