Amidst the stock market turmoil that gripped the U.S. equity on Monday, January 27, bears appear to have lost their confidence that various shares – including those of technology giants – are ready to fall.
Specifically, as Nvidia (NASDAQ: NVDA) shares plummeted on Monday, so has the NVDA stock short ratio dropped below 50 for the first time in a week, per the latest data Finbold retrieved from Fintel.
Indeed, the figure held steady near 55 – and even approached 59 on Thursday – throughout the week between January 20 and January 24, while the latest reading shows the number stands at 45.58.
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Still, the relatively high figure remains that despite many Nvidia stock bears likely being able to cash in on their bets, many more estimate NVDA shares have more room to fall. The short volume was as low as 40.39 as recently as January 15, despite the semiconductor equity being at a comparatively high $136.24.
Why Nvidia stock bears were able to cash in
The latest short ratio drop came just as Nvidia stock experienced one of its most severe one-day collapses on record with the company seeing its market capitalization reduced by approximately $600 billion – the single biggest valuation crash on record.
The great Silicon Valley collapse – one that sent NVDA to its press time price of $117.32 – was triggered by the weekend revelation that China’s novel artificial intelligence (AI) was not only as advanced as ChatGPT but was also developed at a fraction of the cost of its American counterparts.
Furthermore, the Hangzhou-based company enabled any entity in the world to replicate its success by making the inner workings of its platform open source.
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Reactions to the development were mixed as they, along with retail and regular institutional investors, jeopardized venture capitalists as the sheer amount of money they put into the various AI companies appeared ill-advised, given the reported costs of the AI model.
Many have also speculated that DeepSeek might burst the suspected AI bubble as it had effectively ended the ‘exclusivity’ of the Silicon Valley big tech club.
Elsewhere, many have voiced their suspicion over the alleged costs of developments, estimating that $6 million is an implausibly low figure.
Elon Musk, for example, opined that DeepSeek must have had more Nvidia chips than reported, while Jim Cramer stated that the NVDA stock selloff was the result of an ‘inferiority complex’ and more related to politics as a ‘Sputnik’ moment than to finance.
Featured image via Shutterstock
