Broadcom Stock Remains Shaky After DeepSeek Sell-Off. How Worried Should Investors Be?
Broadcom stock is struggling for direction Tuesday after the chipmaker fell sharply Monday following the release of DeepSeek, a cheap AI chatbot.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
Broadcom (AVGO) stock is bouncing between positive and negative territory Tuesday after the chipmaker plunged more than 17% Monday following the release of DeepSeek. The artificial intelligence (AI) chatbot from China quickly climbed to the top of Apple's (AAPL) app store as the most downloaded free application.
Wall Street is keeping a close eye on several semiconductor stocks after the release of DeepSeek, an open-source AI chatbot created by a Chinese technology company. DeepSeek claims that it can outperform OpenAI and Meta Platforms' (META) Llama 3.1, amongst others.
Furthermore, DeepSeek took only two months to build its generative AI models and cost less than $6 million, according to Reuters.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"DeepSeek combined a number of techniques to improve compute efficiency in both training and inference," says UBS Global Research analyst Timothy Arcuri. He adds that while many of these techniques are already well known, the feedback from many leading experts in the AI sector, including Marc Andreessen and Noam Brown, "does suggest this was a significant achievement and a very powerful model (with another multi-modal model (Janus-Pro) released today and geared to images)."
Indeed, Andreessen, billionaire Silicon Valley investor and technology expert, posted on X (formerly Twitter) Sunday evening saying, "Deepseek R1 is AI's Sputnik moment."
Nvidia (NVDA), which lost $591 billion in market value on Monday, a record for any stock, also chimed in on DeepSeek's accomplishments.
"DeepSeek is an excellent AI advancement and a perfect example of Test Time Scaling," an Nvidia spokesperson told CNBC yesterday. "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."
Is Broadcom stock a buy, sell or hold?
Even with Monday's sharp drop, Broadcom shares are still up more than 100% on a year-over-year basis. And Wall Street remains overwhelmingly bullish on the tech stock.
According to S&P Global Market Intelligence, the average analyst target price for AVGO stock is $241.97, representing implied upside of nearly 20% to current levels. Additionally, the consensus recommendation is Strong Buy.
Financial services firm BofA Securities has a Buy rating and $250 price target on the large-cap stock.
"Data center continues to be one of the few bright spots into fourth-quarter semiconductor earnings, with four major U.S. hyperscalers (Google, Microsoft, Meta, Amazon) set to report in the coming weeks," wrote BofA Securities analyst Vivek Arya in a January 16 note. "Our top picks in AI remain NVDA and AVGO, respective leaders in merchant and custom AI silicon."
Meanwhile, Mark Malek, chief investment officer of Siebert, called yesterday's sell-off an overreaction. "Competition is what fuels technology innovation! DeepSeek developed an AI [model] in a short period of time with allegedly fewer resources than those used by the U.S.-based prototypes we have all been using to date."
He adds that this is "great news … for every AI behemoth out there who is probably already experimenting with similar models and will by now already be testing DeepSeek's method."
Related Content
-
The Cost of Leaving Your Money in a Low-Rate AccountWhy parking your cash in low-yield accounts could be costing you, and smarter alternatives that preserve liquidity while boosting returns.
-
I want to sell our beach house to retire now, but my wife wants to keep it.I want to sell the $610K vacation home and retire now, but my wife envisions a beach retirement in 8 years. We asked financial advisers to weigh in.
-
How to Add a Pet Trust to Your Estate PlanAdding a pet trust to your estate plan can ensure your pets are properly looked after when you're no longer able to care for them. This is how to go about it.
-
How to Add a Pet Trust to Your Estate Plan: Don't Leave Your Best Friend to Chance
Adding a pet trust to your estate plan can ensure your pets are properly looked after when you're no longer able to care for them. This is how to go about it.
-
Want to Avoid Leaving Chaos in Your Wake? Don't Leave Behind an Outdated Estate PlanAn outdated or incomplete estate plan could cause confusion for those handling your affairs at a difficult time. This guide highlights what to update and when.
-
I'm a Financial Adviser: This Is Why I Became an Advocate for Fee-Only Financial AdviceCan financial advisers who earn commissions on product sales give clients the best advice? For one professional, changing track was the clear choice.
-
Nasdaq Slides 1.4% on Big Tech Questions: Stock Market TodayPalantir Technologies proves at least one publicly traded company can spend a lot of money on AI and make a lot of money on AI.
-
I Met With 100-Plus Advisers to Develop This Road Map for Adopting AIFor financial advisers eager to embrace AI but unsure where to start, this road map will help you integrate the right tools and safeguards into your work.
-
The Referral Revolution: How to Grow Your Business With TrustYou can attract ideal clients by focusing on value and leveraging your current relationships to create a referral-based practice.
-
This Is How You Can Land a Job You'll Love"Work How You Are Wired" leads job seekers on a journey of self-discovery that could help them snag the job of their dreams.
-
Fed Vibes Lift Stocks, Dow Up 515 Points: Stock Market TodayIncoming economic data, including the January jobs report, has been delayed again by another federal government shutdown.
