Tech Just Crashed. Now What?

January 30, 2025

Tech Just Crashed. Now What?

Did you feel that earthquake on Monday?

We saw some of the largest single-day moves in some of the strongest stocks of the past decade. Technology stocks fell so hard it created an implosion felt across the entire market… a $969 billion implosion to be exact.

So how could the market lose nearly $1 trillion in a single day? It’s all thanks to panic selling after some shocking news came out of China.

I talked in depth about it in Monday’s Power Trends, but let’s quickly recap here before looking at some specific stocks.

DeepSeek, an AI startup in China, released information that rocked the tech world. They claim that they were able to train an AI model in just two months at a measly (in AI terms) cost of $5.6 million. And, according to DeepSeek, it can outperform OpenAI’s ChatGPT.

I’m taking this all with a grain of salt, and you should, too. This announcement comes after last week’s unveiling of the $500 billion American AI investment partnership called Stargate. The venture was announced at the White House last Wednesday, with OpenAI, Softbank, Oracle, and MGX joining forces to build and develop AI technology.

The goal was to make America the AI leader, and China quickly shot back.

The implications are clear. If DeepSeek can do comparable AI in less time and at a fraction of the cost, then the whole game just changed. AI-hungry models will no longer need the fastest chips, or at least not as many. This could lead to a move from an under supply to an oversupply, meaning that half-a-trillion-dollar investment slated for project Stargate is massive overkill.

The biggest blow hit one of the biggest stocks: Nvidia (NVDA). It’s long been the poster child for AI progress and AI stocks, and it saw the single largest market cap loss in history – nearly $600 billion!

All but about 15 companies aren’t even worth that much to begin with, and that was NVDA’s one-day fallout. You can see on the heatmap below an awful lot of red in tech stocks.

So… Now What?

Of course, this isn’t the end of Nvidia… or likely any of the other tech stocks that took it on the chin Monday.

As I’ve mentioned, it’s important to remember that the information coming out of China has questionable legitimacy. It strikes me as a bit curious that this messaging came just a couple of weeks in the wake of NVDA CEO Jensen Huang splashing cold water on quantum computing stocks.

He said the first useful quantum computers won't be here for at least another 30 years. That single statement put immense pressure on quantum computing stocks.

DeepSeek’s announcement also came after President Trump threatened tariffs on China. It goes without saying China's heavily reliant on the United States as a consumer of its exported goods, and a tariff would have a significant impact.

So, is it possible that this was an orchestrated hit job? It is.

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That’s all speculation, though, and I believe in cold hard data. Investing based on speculation has much lower odds of success.

On Monday, QQQ, which is the NASDAQ 100 tracking ETF, fell more than 2.9%. That ugly number is fairly infrequent. In fact, I looked back over the last 20 years and found only 120 prior instances of this same price action or worse. Now look at the forward returns after such a massive flush of tech stocks. The results are shocking:

Source: FactSet

Now let’s take a closer look at NVDA. Its fall this week pushed the stock down to where it traded last October, which is still up an astonishing 735% from January of 2023. It is also up 1,835% since January of 2020. Those are impressive numbers.

As you can see above, the company’s fundamentals are unchanged after its rocky week. The Technical Score, which is based on the stock’s trading, is dragging down the Quantum Score to 63.8. And that number isn’t even all that bad.

With an incredible Fundamental Score of 79.2 and a superior product that is so in demand it has an order backlog, I certainly wouldn’t bet against this stock.

It will be fascinating to see what the company says on their earnings call scheduled for February 26. I anticipate another earnings and revenue beat. But all eyes will be on forward-looking statements.

Let’s take a look at another stock that was hit hard this week that is not going away. It’s one I recommended to my Quantum Edge Pro subscribers and, despite Monday’s news, is now up nearly 95% for us.

Celestica (CLS) does everything from design and engineering to product introductions to supply chain services, testing, manufacturing, fulfillment, and even after-market services like repairs and returns.

Its stock fell over 28% after the news on Monday but has rallied 31% since, and is now seeing an almost 14% jump just today after strong earnings.

Though CLS is now above my buy limit, it still holds a strong Quantum Score of 69. With another impressive earnings report, I anticipate the company will continue its growth, which is why we didn’t sell in Monday’s chaos.

While it is possible DeepSeek will radically disrupt the entire AI industry, the likelihood is questionable. For now, stocks like NVDA and CLS continue to be among the best in show.

When the stock market experiences an earthquake as high on the Richter scale as it did this week, my advice is to rely on the data and do your best to separate fact from fiction and speculation. Remember, when the NASDAQ falls like it did Monday, forward returns are outstanding for the past 20 years.

I think this will shake out to be a great buying opportunity.

If you’re ready to take advantage of this historic event, click here to learn more about Quantum Edge Pro. You’ll gain immediate access to the current portfolio, my future recommendations, and the power of my Quantum Score tool… where you can check the score any of the 6,000 stocks my system ranks every day with just one click.

Remember to trust the data.

Talk soon,

Jason Bodner signature