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Investing.com-- Monday’s steep sell-off in NVIDIA Corporation (NASDAQ:NVDA) triggered by competitive fears surrounding Chinese AI startup DeepSeek, was an overreaction, Tom Lee, head of research at Fundstrat Global Advisors, told CNBC.
Speaking to CNBC, Lee emphasized that the 17% drop, Nvidia’s largest single-day decline since March 2020, could represent a significant buying opportunity for investors.
Shares of Nvidia and other semiconductor giants, including Broadcom Inc (NASDAQ:AVGO) tumbled after DeepSeek introduced a cost-effective, open-source AI model. Built for under a fraction of the cost compared to existing AI models, DeepSeek intensified fears that rivals could develop competitive AI solutions without relying heavily on high-powered, expensive chips like those produced by Nvidia.
“To me, it’s an overreaction,” Lee told CNBC’s “Closing Bell. He added that declines of this magnitude turn into huge opportunities for long-term investors in the past.
He downplayed concerns that Nvidia’s dominance in the AI sector was at risk, likening the current panic to the short-lived Betamax video format’s battle against VHS.
The sell-off comes amid broader anxieties about the intensifying AI race between China and the United States. While Beijing’s progress raises questions about future market dynamics, Lee remained optimistic about Nvidia’s position, though he cautioned that it is too early to predict whether the recent slump marks the start of a long-term trend.