On Tuesday, Apple’s stock was surprisingly buoyant. That momentous crossing of these SMAs has been dubbed the Death Cross, a bearish pattern commonly characterized by the failure to cross through the 50-day SMA. This development occurred amid dynamic shifts in the tech industry, influenced by China's AI narratives and economic indicators from the United States. While Apple saw an uptick in its stock following CEO Tim Cook's announcement about a popular Chinese video game, Wuthering Waves, coming to the Mac ecosystem, Nvidia's stock faced challenges, entering into a Death Cross pattern after concerns were raised about a potential AI bubble in the US market.
Alibaba announced last week that it will be cutting prices on its AI products. This action is largely in response to increasing threats from the new open-source AI chatbot Deepseek. Despite Alibaba's release of its own advanced AI platform, Qwen 2.5-Max, which it claims outperforms Deepseek's latest version, the market remained wary. Alibaba Chairman Joe Tsai's comments on the heavy US investment in AI being "the beginning of some kind of bubble" added to the apprehension surrounding Nvidia's stock performance.
Apple Stock Holds Firm
Apple’s stock had already bounced back with a gain of more than 1% on Tuesday before Wedbush’s report. On stage, CEO Tim Cook heralded the arrival of Wuthering Waves — the reigning Chinese gaming juggernaut — to the Mac platform. This notice further fueled the fire of rising interest. Cook thanked Kuro Games for their ongoing collaboration, praising how they’re using Apple’s technologies to enhance gaming experiences.
"Wuthering Waves is coming to Mac on Thursday! Thanks Kuro Games for sharing how you use Apple technologies to deliver incredibly immersive experiences for gamers everywhere!" – Tim Cook
The announcement served to underscore Apple’s ambition to further entrench its ecosystem, as well as a desire to expand its presence into the gaming sector. This huge investor sentiment coincided with the hype of Wuthering Waves release. This wave of optimism enabled Apple to avoid the feared Death Cross formation that has plagued other tech stocks.
Alibaba and Deepseek: The AI Price War
Alibaba was under extreme duress to reverse course on its pricing approach to generative AI products. This change followed the release of a cheaper competitor by Deepseek, an open-source AI chatbot. In reaction, Alibaba slashed prices to the bone and launched Qwen 2.5-Max, its own in-house AI platform. Alibaba claims that Qwen 2.5-Max outperforms the third version of Deepseek in all aspects.
Still, Alibaba Chairman Joe Tsai has gone on record as skeptical about this current wave of US investment in AI technologies. He indicated that investors could be misjudging demand at today’s highs.
"I don't think that's entirely necessary. I think in a way, people are investing ahead of the demand that they're seeing today." – Tsai
Tsai's remarks echoed broader concerns within the industry regarding the sustainability of current investment trends and their long-term implications for market stability.
Nvidia's Challenges Amid AI Bubble Concerns
Nvidia’s stock was particularly hard hit on Tuesday as it crossed into a Death Cross pattern. This bodes ill for its future stock price. This trend followed Alibaba officials warning of an AI investment bubble in the US markets. According to analysts, if Nvidia’s support at $105 does not hold, the shares can quickly fall to $92. This level became a very important support level during the crash of August 5th 2024.
The past couple of weeks’ correction in Nvidia’s stock highlights this extreme sensitivity of tech stocks to market narratives and investor sentiment. Surveys of business and consumer sentiment are both focused on looking ahead to the course of the US economy. At the same time, Nvidia’s performance will be the subject of intense scrutiny.