(Amanda Andrade-Rhoades/Getty Images)

Traders still like AI, but maybe not data centers

There seems to be some hedging of bets.

1/28/25 3:32PM

The stock market put together a respectable recovery from the panic of Monday’s DeepSeek dive, especially market behemoth Nvidia’s recovery of a solid $125 billion or so in market value to retake the $3 trillion mark in terms of market cap.

Clearly the AI trade isn’t dead.

But on closer inspection, the damage to stocks associated with the capital expenditure blitz on data centers that we’ve seen over the past few years continues to be deep.

Meanwhile, the recovery in so-called AI software stocks — firms like Salesforce, Palantir Technologies, and ServiceNow, which stand to benefit from AI advancements without sinking massive amounts of capital into highly illiquid bets on cavernous data centers — has been much more robust.

As of Tuesday, the Goldman Sachs thematic bucket of AI software stocks is now outpacing stocks depending on the ongoing largesse of big data center spenders for the first time over the last year. (See above.)

Of course, even within that carnage there are a few recovery stories, with GE Vernova and Vistra rallying strongly after the former announced a deal with Chevron to form a company to supply power to data centers.

Sure, it could be a mere fluke that will revert once the animal AI spirits recover. At the same time, the scale of the paper losses yesterday in some stocks is bound to make an impression on investors, and shifting exposure from asset-heavy AI bets toward AI free riders seems to make a lot of sense if the technical advances on DeepSeek — which our colleague is smart enough to understand and explain — are legit.

Hyunsoo Rim17m

Michael Burry, of “Big Short” fame, discloses ~$1.1 billion options bet against Nvidia and Palantir

"Big Short" investor Michael Burry, famous for predicting the 2008 housing crash — and a number of crashes since that haven’t materialized quite as spectacularly — has placed massive bets against Nvidia and Palantir, according to a new regulatory filing for the quarter ending September 30.

The 13-F filing released Monday discloses that Burry's fund, Scion Asset Management, bought put options on roughly 5 million Palantir shares worth $912 million, and 1 million Nvidia shares worth $187 million. Together, the two positions make up 80% of Scion's disclosed US equity holdings, per the 13F.

'Big Short' Michael Burry bet against Palantir and Nvidia

Max Knoblauch & Claire Yubin Oh35m

Nintendo’s Switch 2 sales are outpacing the original Switch by ~2x

After a booming first month in which it sold 5.82 million Switch 2s, Nintendo on Tuesday reported that it has now sold 10.36 million units of the handhelds through September.

That’s well ahead of the original Switch’s pace at the same period in its lifetime — the first Switch model sold 4.7 million units through its first four months, though it went on to become the company’s all-time console sales leader.

Nintendo appears to be growing more confident in the Switch 2, despite US tariffs. Last month, the company boosted its annual production target to 25 million units by the end of March 2026, according to reporting by Bloomberg.

The new data came as the Japanese gaming giant reported its first-half earnings on Tuesday. Nintendo posted ~$3.6 billion in sales for the three months ending September, topping the $3.04 billion expected by analysts polled by Bloomberg.

The company also hiked its full-year guidance to a revenue of ~$14.6 billion, as well as its expectations for Switch 2 sales. The company now anticipates selling 19 million units compared with 15 million units projected previously. Despite the news, Nintendo’s US-traded ADRs were relatively flat in after hours trading on Monday, suggesting elevated expectations into the print.

J. Edward Moreno

15h

Hims rises on revenue beat, discloses it’s again in partnership talks with Novo

Hims also disclosed on Monday that it’s in talks with Novo Nordisk to make the drugmaker’s weight-loss drugs available on its platform. Last time, that didn’t go so well.