Don Kaufman here. 

Unless you’ve been living under a rock (or ignoring your portfolio), you probably noticed the market just got rocked. 

The Nasdaq? Down over 3%. The S&P 500? Smacked for nearly 2%. And Nvidia? Oh boy, Nvidia got obliterated—down 17%.

The culprit? 

A little company out of China you’ve probably never heard of: DeepSeek. 

Yeah, I know, it sounds like the name of a dystopian sci-fi movie, but this startup just sent shockwaves through the AI industry. And if you’re holding AI stocks like Nvidia, Broadcom, or even those derivative plays like power companies—well, let’s just say you probably felt the pain today.

So, grab a coffee (or something stronger), and let’s break this down in plain English: What happened, why the market freaked out, and how you should navigate this mess going forward.

DeepSeek Just Changed the AI Game

Here’s the deal: For the past year, AI has been the darling of Wall Street. Companies like Nvidia have been riding high on the hype, selling GPUs by the truckload to fuel massive AI projects. We’re talking billions of dollars in compute power, sprawling data centers, and sky-high valuations for anything remotely connected to artificial intelligence.

And then along comes DeepSeek, this little Chinese AI startup, saying, “Hey, guess what? We built an AI model that’s just as good—if not better—than yours… and we did it for $6 million.”

Yeah. Six. Million. Dollars.

Now, Wall Street’s still scratching its head on whether that number is real, but here’s the point: DeepSeek’s model, called R1, is open-source, lightweight, and reportedly outperforms some of the big players like OpenAI. 

If this is legit, it means AI development just went from being a billion-dollar game to something a few geeks in a garage could pull off.

And that… is a big problem for companies like Nvidia, AMD, and even Microsoft. 

Because if you don’t need all that expensive hardware and infrastructure to build AI, what happens to the demand for GPUs, servers, and data centers? Yeah, you guessed it—demand tanks, and so do the stock prices.

The Fallout: Nvidia’s Nightmare

Let’s talk about Nvidia because, oh boy, did it take a beating today. Down 17% in one session. 

And it’s not just Nvidia—Broadcom got whacked for 19%, AMD fell 7%, and even Microsoft wasn’t immune, dropping 3%.

Why such a massive sell-off? Because the entire AI ecosystem is built on the assumption that you need massive amounts of compute power to make AI work. And if DeepSeek just proved otherwise, then the whole house of cards starts to wobble.

Here’s the thing: Markets don’t like uncertainty, especially in sectors that are already trading at sky-high valuations. So what happens? Investors hit the sell button. Hard.

This is what we call a repricing event. 

It’s when the market suddenly realizes that everything it thought it knew about a sector might be wrong. And right now, AI stocks are getting repriced in real-time—and not in a good way.

What About the Rest of the Market?

Now, before you freak out and start selling everything, let me hit you with some perspective. Yes, the Nasdaq got clobbered today, down over 3%. Yes, the S&P slid nearly 2%. But take a look at the Dow—it was actually up 0.3%.

Why? Because investors weren’t abandoning stocks altogether—they were rotating into defensive sectors. 

Consumer staples, healthcare, real estate—these areas held up pretty well today. So this wasn’t a total market meltdown; it was more like a tech-specific gut punch.

That said, don’t get too comfortable. This kind of volatility doesn’t just disappear overnight. Today’s sell-off wasn’t a one-day event—it’s the start of a repricing process that could ripple through the markets for days (or weeks).

What Should You Do Now?

Alright, let’s get to the good stuff—how do you play this? Here’s my advice:

1. Don’t Panic-Sell

Look, I get it. Watching Nvidia drop 17% in a day is brutal. But selling in a panic is the fastest way to lock in losses. Take a breath, step back, and remember: Volatility is where opportunities are born.

2. Cancel Your Working Orders

If you’ve got stop orders sitting out there, cancel them right now. In fast-market conditions like this, spreads widen, and you’ll get slaughtered on bad fills. Control your trades—don’t let the market control you.

3. Wait for the Dust to Settle

This is not the time to start throwing on speculative trades. Let the market stabilize. There will be opportunities later in the week as things start to sort themselves out.

4. Look for Defensive Plays

Not everything got crushed today. Consumer staples, healthcare, and real estate were relative bright spots. If you’re looking for places to park your cash, these sectors might be worth a closer look.

5. Watch Nvidia Like a Hawk

Nvidia is the canary in the coal mine for this AI sell-off. If it stabilizes, the broader tech market might find its footing. But if Nvidia keeps sliding—especially after breaking key levels—watch out below.

Volatility Isn’t the Enemy

Here’s the thing…

Days like today are why I love the market. Yeah, it’s ugly, but volatility isn’t your enemy—it’s your opportunity. This DeepSeek news? It’s a game-changer, no doubt about it. But it’s also creating opportunities for traders who know how to keep their cool.

So don’t play in traffic. Don’t panic. And definitely don’t try to catch falling knives. Instead, focus on managing your risk, watching for opportunities, and staying disciplined. The market is chaotic, sure, but chaos is where the money’s made.

And remember: We’re just getting started. With earnings from Microsoft, Meta, and Apple this week—and the Fed meeting on deck—you’d better believe there’s more volatility coming.

Now, let me tell you, even in the middle of all this market chaos, I was able to lock in a 50% profit on my XLI put spread in just one day. That’s the beauty of knowing how to navigate fast-market conditions and taking advantage of the right opportunities at the right time.

If you want to stay ahead of the market and get my best trading ideas—ideas that work in markets just like this one—click here to get them for just $7.

Stay safe, stay smart, and, as always, try to laugh at the absurdity of it all. After all, we’re just trading in a world where a $6 million AI model can wipe out $500 billion in market cap.

Welcome to the markets, baby.

To your success,

Don Kaufman

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The markets are reeling after a sharp selloff…

The Nasdaq plunged 3.4%, the S&P 500 slid 1.9%, and AI darling Nvidia dropped 17% amid fears of an AI bubble bursting. Rising competition from China’s DeepSeek, coupled with broader market volatility, has sent shockwaves through Wall Street.

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