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DeepSeek, HOLO, and How to Buy Into the Chinese AI Hype

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Written by Timothy Sykes
Reviewed by Jack Kellogg Fact-checked by Matt Monaco

Today’s sell-off in AI-linked stocks, triggered by the emergence of China’s DeepSeek and its cost-efficient R1 model, has sent the tech market spinning. While the headlines might suggest doom and gloom for major players like Nvidia (NASDAQ: NVDA) and Applovin Corp (NASDAQ: APP), savvy traders say this could be a golden buying opportunity in a recalibrating AI sector.

Even though you can’t buy DeepSeek stock directly, it has sent shockwaves through the market, creating ripples that traders like me have learned to capitalize on. Stocks such as MicroCloud Hologram (NASDAQ: HOLO), a known penny stock player, jumped on the hype by issuing a press release claiming plans to integrate DeepSeek’s R1 into their holographic AI applications. 

Predictably, this kind of “penny stock PR play” generated a premarket pop. I traded HOLO twice this morning and walked away with some solid small gains by focusing on quick, disciplined trades.

 

If you’re navigating this volatile AI wave, here’s what you need to know:

The DeepSeek AI Frenzy

Chinese AI startup DeepSeek unveiled its R1 model, claiming it rivals leading models like OpenAI’s GPT-4 at a fraction of the cost. Market skepticism is warranted, given the vague details around its development and the questionable economics of its reported $5.57M training cost. However, that didn’t stop DeepSeek from overtaking ChatGPT as the most downloaded app on the Apple Store.

This announcement rattled major U.S. tech stocks today. Nvidia, the backbone of current AI hardware, plunged 13%, with others like Google and Tesla shedding between 3% and 6%. Investors are questioning whether U.S. firms’ heavy spending on AI infrastructure is sustainable in the face of this low-cost competition.

HOLO: A Penny Stock Riding the DeepSeek Hype

In the penny stock world, MicroCloud Hologram (NASDAQ: HOLO) wasted no time in leveraging the DeepSeek frenzy. HOLO issued a press release this morning announcing plans to integrate DeepSeek’s R1 into its holographic AI applications. While such PR plays often lack substance, they can generate explosive short-term moves, which is exactly what happened today.

  • HOLO spiked to $3 in premarket trading after closing at $1.55 yesterday, only to dip back down to $1.84 by 11 a.m.
  • I executed two trades during the morning hype:
    1. $518 profit (starting stake $8,658) on a quick premarket buy at $2.34 and sell at $2.48.
    2. $950 profit (starting stake $12,350) on a dip buy at $2.47 for a bounce to $2.66.

These trades illustrate the importance of reacting to price action rather than trying to predict the future. HOLO is a classic penny stock pump that thrives on market headlines. While it’s tempting to hold out for larger gains, my approach focuses on singles—small wins that add up over time.

More Breaking News

The Bigger Opportunity: Buying the Dip in Overinflated Tech Stocks

Beyond penny stocks, the broader sell-off in AI-heavy tech stocks could present a lucrative opportunity for traders with a disciplined approach. While Nvidia isn’t a penny stock, my 7-Step Pennystocking Framework applies just as well to these larger, overinflated plays.

  1. Massive Panic = Opportunity: Stocks like NVDA, APP, and Arm Holdings (NASDAQ: ARM) are seeing steep declines due to fears of DeepSeek’s low-cost disruption.
  2. Identify the Catalyst: DeepSeek’s AI announcement sparked a massive sell-off in AI-linked tech stocks.
  3. Look for Overreaction: The market often overreacts to news, especially when it’s based on unverified claims.
  4. Plan Your Entry: NVDA’s 13% drop could set up a strong bounce if the market realizes DeepSeek isn’t a credible long-term threat.
  5. Manage Risk: Big tech stocks can move fast, so set tight stop losses to protect your account.
  6. Take Profits into Strength: Don’t get greedy—lock in gains as the stock rebounds.

Lessons From HOLO and NVDA: React, Don’t Predict

Whether you’re trading penny stocks like HOLO or big names like NVDA, the principles remain the same: react, don’t predict. The market’s job is to constantly price in new information, and as traders, our job is to spot the inefficiencies and capitalize on them.

For HOLO, the inefficiency came from a hyped-up press release that temporarily inflated the stock price. By focusing on the price action and taking quick profits, I avoided getting caught up in the inevitable pullback. For NVDA, the inefficiency lies in the market’s overreaction to a potential competitor whose long-term impact is still unclear.

Both scenarios highlight the importance of staying disciplined and sticking to a strategy. The market is full of opportunities, but it’s up to you to identify them and execute with precision.

Final Thoughts: The AI Wave Is Just Beginning

The sell-off triggered by DeepSeek’s R1 model is just another chapter in the larger AI story. While headlines today are focused on China’s potential disruption, the long-term growth of AI as an industry remains intact. Companies like Nvidia and Microsoft have spent billions building the infrastructure to support this revolution, and those investments won’t evaporate overnight.

As traders, it’s important to zoom out and remember that volatility creates opportunity. Whether it’s trading penny stocks like HOLO on short-term hype or buying the dip in overinflated tech giants like NVDA, the key is staying adaptable and disciplined.

This is a market tailor-made for traders who are prepared. AI penny stocks thrive on volatility, but it’s up to you to capitalize on it. Stick to your plan, manage your risk, and don’t let FOMO drive your decisions.

These opportunities are fast and unpredictable, but with the right strategy, you can make them work for you.

I recommend that you pay close attention to the first days of this possibly historic bull market.

If you want to know what I’m looking for—check out my free webinar here!


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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”