Institutional Investors Fuel Nvidia's Recovery
Institutional investors, often referred to as "smart money," appear to be cautiously buying Nvidia (NVDA) shares after a recent downturn. According to Vanda Research, retail purchases of Nvidia have declined significantly in February, but the stock has begun to rebound.
The recovery is supported by limited institutional option flows, suggesting some hesitation. However, Vanda Research believes it indicates confidence in Nvidia and the AI sector. Recent developments, including DeepSeek's launch, have been digested by analysts and do not appear to pose a significant threat to AI's growth trajectory.
DeepSeek Concerns Ease
Initial concerns that DeepSeek's AI capabilities could erode demand for Nvidia's chips have subsided. Evercore analyst Mark Lipacis attributes Nvidia's weakness to three factors: lowered AI demand, a potential shift towards ASICs, and Blackwell chip delays.
However, DeepSeek's model, RI, reportedly costs significantly less to build than those from US companies, raising questions about overspending on AI infrastructure. Nevertheless, industry experts believe Nvidia remains the preferred platform for hyperscalers.
Palantir Attracts Retail Investors
As retail investors exit Nvidia, they are flocking to another tech momentum stock, Palantir (PLTR). Vanda Research reports record retail demand for PLTR, exceeding $339 million in the past week.
This demand has outweighed insider selling, which is typically a negative indicator. However, Vanda notes that if retail sentiment shifts and insider selling continues, PLTR could face challenges.