AI Portfolio

Why AI Stocks Micron (MU), Vertiv (VRT), Credo (CRDO) Are Rebounding Thursday

Eric Bleeker

Published: January 30, 2025 10:56 am

Last Updated: January 30, 2025 11:01 am

Is the DeepSeek panic over? Stocks involved in the AI infrastructure build-out saw a punishing sell-off on Monday. Many leading names in the trade like Vertiv (NYSE: VRT) and Credo (Nasdaq: CRDO) dropped by more than 30% in a day. 

Yet, as the panic has subsided, many of these stocks have rebounded. Let’s look at why stocks ranging from Micron (Nasdaq: MU) to Credo are seeing such strong rebounds today. 

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Why Micron, Credo, and Vertiv Sold Off Monday 

Over the weekend a panic developed around DeepSeek’s new R1 family of models. A few factors helped drive this panic to levels that sunk the share price of most AI-related stocks:

• First, DeepSeek is a Chinese company, so attention on its newest models stoked fears that America was losing its lead in the AI space. 
• Second, DeepSeek announced several innovations that focused on the efficiency of its models. While the media ran with a $5 million figure around DeepSeek’s training costs, looking at the details there were several innovations that drive efficiency in areas like memory usage from models. 
• Third, the attention on DeepSeek created a stronger possibility of additional controls on export controls which could diminish demand, especially for products from NVIDIA (Nasdaq: NVDA). 

Yet, it’s important to call Monday’s trading exactly what it was: a panic. On platforms like Elon Musk’s ‘X,’ major accounts that don’t normally post about AI tried creating sweeping threads about how R1 would be the doom of various AI stocks. 

The reality is that while DeepSeek introduced several novel concepts, efficiency in AI compute is something that’s been moving at an extremely rapid rate. For example, the inferencing costs on some OpenAI models have decreased by 1,000-fold across the past three years. 

Just through progress in GPUs alone, the performance of AI inferencing has increased about 1,000-fold over the past 10 years (which leads to corresponding cost decreases). Then of course there are software efficiencies (like what DeepSeek’s paper discussed) on top of those gains. The CEO of Anthropic estimates that algorithmic progress has been running at about 4-fold per year. 

That is to say, the innovations that DeepSeek pursued as a necessity (they’re limited on GPUs due to export controls, so they had to focus on certain areas) are just one area of progress in a race to decrease the cost of computing. 

DeepSeek doesn’t introduce a new paradigm; it’s just one more factor accelerating one that’s existed and has been driving the AI boom for years. 

AI Stocks Continue to Rebound 

Given all of the above, it’s not surprising that Monday’s panic has subsided. I would expect to see continued volatility. Monday shows that many people invested in AI stocks have feared some moment ‘popping the bubble’ and were ready to get out at the first sign of trouble. 

In addition, many of these stocks have increased by a tremendous amount and general volatility is to be expected. 

Yet, the further we get past the initial shock (and breathless social media pile-on) of DeepSeek, the more the market will likely focus on the results and commentary from the biggest spenders in artificial intelligence. That includes companies like Meta Platforms (Nasdaq: META) and Microsoft (Nasdaq: MSFT). 

Last night both companies reported, and largely stuck to AI spending plans. Meta had recently taken its capital expenditure projections up past $60 billion (the market was previously anticipating about $48 billion in spend next year) and kept a projection of $60 to $65 billion in spend this year. 

Microsoft said its spending levels will be flat in the next two quarters, and growth in AI spending will decrease in 2026, but that’s been the market’s expectation all along. The biggest fear has been that 2026 could see budgets pause (or in a very bad scenario decrease), but no one is currently modeling the same level of spending growth in 2026 as we’ll see this year. 

So, commentary from Microsoft and Meta was enough to help soothe fears around AI stocks last night, but they also more or less repeated exactly what most observers expected them to say. 

Stocks Soaring Today 

After Microsoft and Meta’s comments yesterday, AI stocks are generally seeing positive performance today. 

• Celestica (NYSE: CLS): Up 15% today. The company has significant experience with procuring and designing systems around Broadcom’s custom chips thanks to its partnership with Google. After Meta announced last night they’d pursue additional efficiencies in spend by replacing end-of-life NVIDIA chips with their MTIAs designed by Broadcom, that started a dual reaction where Broadcom shares rallied while NVIDIA’s shares fell. Celestica will generally do well whenever there is the discussion of continued spending shift away from NVIDIA chips and toward custom ASICs built by companies like Broadcom. 
• Credo (Nasdaq: CRDO): Credo was amongst the most heavily punished stocks on Monday, falling more than 30%. So, it’s not surprising to see the stock more quickly when optimism emerges around AI data center spend. Its stock is up around 9% today. Even after recent gains, its shares are down 24% in the past week. 
• Vertiv (NYSE: VRT): Another stock that was hit the hardest on Monday. Vertiv shares initially jumped to $119 per share this morning before settling into more moderate gains of 3% in morning trading. Vertiv is a key beneficiary of NVIDIA’s Blackwell systems which demand more liquid cooling, so NVIDIA potentially losing share to Broadcom could be seen as a negative. However, custom accelerators like Meta is using also have demand liquid cooling so this isn’t as much of a threat to Vertiv as some headlines may claim. Vertiv’s shares started Friday trading for $155 following the announcement of Stargate, but now trade for $113. They’re up about 13% from where they bottomed out on Monday. 
• Micron (Nasdaq: MU): Another stock that saw a severe sell-off on Monday. Micron has been riding enthusiasm around the growth of high-bandwidth memory (HBM). DeepSeek introduced an algorithmic advancement that could lessen the ravenous demand for more memory in GPU clusters. Yet, commentary from Lam Research (Nasdaq: LRCX) sparked enthusiasm about a continuing rebound in areas like DRAM memory that would be good for Micron.

Some other stocks to watch today include optical stocks – Coherent (Nasdaq: COHR), Lumentum (Nasdaq: LITE) – that are rebounding as well. 

NVIDIA’s shares are down 3.4%, likely driven by Meta’s comments about moving more spending to its custom ships.