This article is sponsored by Société Générale, Singapore Branch.
The AI boom has fueled Nvidia’s meteoric rise, but could a new player from China be the catalyst for a reversal? Award-winning trader Robin Ho thinks so. With the emergence of DeepSeek, a low-cost AI model from China, the market is questioning the sustainability of big tech’s aggressive AI spending. Robin saw an opportunity and took a short position on Nvidia using Daily Leverage Certificates (DLCs), positioning himself to profit from the market turbulence—before the US market even opened.
The Thinking Behind His Trade
Robin had been warning about the risks to big tech since December 2024. He saw parallels between today’s AI frenzy and the 2000 dot-com bubble, where excessive investment eventually led to a major market correction. With Nvidia at the center of the AI revolution, any disruption in the sector could trigger a sell-off.
A key risk Robin identified was the AI monetization dilemma faced by big tech companies. While companies like Nvidia, Microsoft, and Google have poured billions into AI research and infrastructure, the challenge lies in turning these heavy investments into sustainable profits. The cost of developing and maintaining cutting-edge AI models has skyrocketed, raising concerns over the long-term viability of these expenditures. If investors begin to doubt whether AI can be effectively monetized at scale, a correction in tech valuations could follow.
DeepSeek’s breakthrough technology, built at a fraction of the cost of Western models, further intensified these concerns. Its ability to rival established AI systems at a significantly lower investment cost raised doubts about the necessity of big tech’s extravagant spending. If Nvidia’s premium AI chips and software face growing competition from cost-effective alternatives, its long-term growth prospects could be challenged. Robin anticipated that this shift in sentiment would trigger a sharp decline in Nvidia’s stock price. This shift in sentiment could lead to a broader reassessment of AI-related stocks, potentially dragging down other key players in the sector as well.
Capitalising on Market Turmoil
On January 27, 2025, news of DeepSeek sent shockwaves through the markets. Nvidia’s market price had tumbled by more 6% during Asian hours, and Robin acted swiftly. He shorted Nvidia through DLCs on the Singapore Exchange (SGX), allowing him to gain exposure to the stock before US markets opened. This strategic move exemplifies how traders can take advantage of global market developments without having to wait for the New York Stock Exchange to start trading.
By the time US markets started trading, Nvidia had plunged further—dropping nearly 17% by January 28, marking its worst single-day decline since March 2020. Traders who positioned themselves early saw significant gains. This event highlighted the fragile nature of the AI-driven rally and reinforced the importance of staying ahead of major technological disruptions.
Trading During Singapore Market Hours
One of the biggest advantages Robin leveraged was trading Nvidia via DLCs on SGX during Asian market hours (9:00 AM to 5:00 PM SGT). This eliminated the need to wait for the US market to open, giving traders a head start on major market movements. This advantage is particularly useful in fast-moving markets, where a delay of even a few hours can mean the difference between capitalizing on an opportunity or missing out altogether.
For investors in Asia, this also means they can react in real time to breaking news, economic data releases, and global market shifts without being constrained by US trading hours. The ability to act decisively when opportunities arise can be a game-changer for active traders looking to maximize their returns.
Amplifying Returns with DLCs
DLCs offer leveraged exposure, meaning traders can potentially multiply their profits compared to trading the underlying stock directly. In this case, traders who purchased the 3x Short NVDA DLC when SGX market open 9:00 AM on January 27 saw gains of approximately 20% the next morning. This highlights the power of using leveraged instruments in fast-moving markets.
However, while leverage can amplify gains, it also increases the risks. Traders need to manage their positions carefully, using stop-loss mechanisms and disciplined risk management to avoid excessive losses. Robin, an experienced trader, understands these risks and employs strategies to mitigate them, ensuring that his trades align with his broader market outlook.
Short-Term Trade, Not a Long-Term View
It’s important to note that Robin’s position on Nvidia is a short-term trade based on current market conditions and volatility. His strategy is not a reflection of Nvidia’s long-term potential but rather an opportunistic move to capitalize on short-term price swings. Nvidia remains a dominant player in the AI space, and long-term investors may have a different outlook. Robin’s approach highlights the flexibility of active trading, allowing investors to profit from both rising and falling markets without being tied to a singular long-term view.
What’s Next for Nvidia?
Robin believes Nvidia’s next key support levels are $129 and $123.50. If it fails to hold above $123.50, the next major support could be $106. With the market reassessing Nvidia’s valuation, Robin plans to monitor any rebounds to $123.50 as potential selling opportunities. This cautious approach underscores his belief that Nvidia’s recent decline is not just a short-term correction but a potential structural shift in the market’s perception of AI valuations.
Meanwhile, investors are closely watching how other AI-related stocks react to DeepSeek’s emergence. If more companies can develop competitive AI models at significantly lower costs, it could challenge the current industry dynamics, leading to broader implications for tech stocks beyond Nvidia.
Final Thoughts
Robin’s trade on Nvidia showcases how experienced traders can anticipate market shifts and execute strategic trades before major events unfold. His ability to react quickly using DLCs on SGX allowed him to profit from Nvidia’s sharp decline while others were still waiting for Wall Street to wake up.
For DIY investors, this case study serves as a reminder that market opportunities exist beyond traditional trading hours. With the right strategy, tools, and insight, anyone can navigate market volatility and take control of their investments. By staying informed and leveraging instruments like DLCs, investors can enhance their ability to capitalize on market fluctuations effectively.
If you’d like to explore more about US stock DLCs, visit the Societe Generale’s DLC website here for additional information.
Want to stay ahead of market trends and learn from Robin’s trading strategies? Join his exclusive Telegram channel where he shares insights, trade setups, and market updates. Click here to join Robin’s Telegram group today!
Disclaimer: This article is sponsored by Société Générale, Singapore Branch. This advertisement has not been reviewed by the Monetary Authority of Singapore. The views expressed under this article represent the personal and independent views of the author and do not constitute investment advice. The content of this article does not form part of any offer or invitation to buy or sell any daily leverage certificates (the “DLCs”), and nothing herein should be considered as financial advice or recommendation. The price may rise and fall in value rapidly and holders may lose all of their investment. Any past performance is not indicative of future performance. Investments in DLCs carry significant risks, please see dlc.socgen.com for further information and relevant risks. The DLCs are for specified investment products (SIP) qualified investors only.
This article is for educational and informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.