Jamie Spencer
Retail investors have aggressively bought Nvidia (NVDA) shares this week, pouring in more than $900 million as they seized the opportunity to buy AI stocks at a discount following fears over China’s DeepSeek.
According to data from Vandatrack, individual traders purchased a record $562 million worth of Nvidia stock on Monday, followed by an additional $360 million on Tuesday. The buying frenzy came after Nvidia shed nearly $600 billion in market value in a historic single-day sell-off before recovering some losses.
Wall Street Weighs DeepSeek’s Impact
The surge in buying comes as analysts assess DeepSeek’s claim that it has developed an AI model that rivals OpenAI but at a fraction of the cost. Investors are questioning whether such advancements will impact spending on advanced AI chips.
Steve Sosnick, chief strategist at Interactive Brokers, described the Nvidia buy orders as “astounding.”
“I don’t ever recall seeing an imbalance of that magnitude,” he said. “Has the active trader’s mantra become ‘the bigger the drop, the bigger the opportunity’?”
Retail Traders Buy the Dip
Leading brokerage firms have reported a spike in AI-related stock purchases:
- Charles Schwab, the largest U.S. retail broker with $10 trillion in client assets, saw increased AI stock buying.
- Trading activity on Robinhood hit its second-highest overnight volume, only behind the November 5 U.S. presidential election.
“We saw buyers of Nvidia… our customers tend to take advantage of an opportunity to get into the names they like,” said Steve Quirk, chief brokerage officer at Robinhood.
Reddit Traders See Opportunity
Retail traders discussing Nvidia on Reddit framed the sell-off as a “Jevons Paradox buying opportunity”—a theory that demand for technology increases as it becomes more efficient.
One Reddit user posted: “AI isn’t slowing, it’s expanding.”
Another added: “Nvidia is still the backbone of the industry, and this dip is a buying opportunity for long-term investors.”
Hedge Funds Exit Nvidia Amid Volatility
While retail traders rushed in, hedge funds took a different approach, offloading significant amounts of Nvidia stock on Monday.
According to Charlie McElligott, a derivatives strategist at Nomura:
“Most of the flow was classic long-only hedge fund clients selling into the move.”
He estimated that Nvidia accounted for roughly 10% of all U.S. cash equities’ notional value traded on Monday.
Conclusion
The Nvidia sell-off has created a divide between institutional and retail investors. While hedge funds cashed out, retail traders saw an opportunity to buy at lower prices, reinforcing confidence in Nvidia’s role as the dominant force in AI.
