BlackRock's Rick Rieder was a buyer of certain names during tech's 'watershed event' this week

Published Wed, Jan 29 202510:54 AM ESTUpdated Wed, Jan 29 202512:26 PM EST

The market fallout from concerns over DeepSeek was a "watershed event" that led to a buying opportunity in certain areas within tech, according to BlackRock's Rick Rieder. The sector was rocked on Monday after Chinese artificial intelligence lab DeepSeek said it had a free, open-sourced large language model that only took two months and less than $6 million to build. AI darling Nvidia plunged 17% on the news , recovered 8.8% on Tuesday and was in the red again during the trading day Wednesday. "It was really a reevaluation, which I thought was healthy," Rieder said of Monday's tech rout, noting that multiples in the space have gotten to really high levels. "You have to understand the companies you're investing in, versus just playing on themes and not every company is going to fit the theme." NVDA 5D mountain NVDA 5-day chart It was also a wake-up call on the amount of capital expenditure companies are saying they need to invest in AI, he added. "It showed the utility of these tools and that some of these companies that exploit the tools effectively can actually move faster and with a lower cost," said Rieder, the company's chief investment officer of global fixed income. He said he bought several names during the sell-off, including software companies that can benefit from faster and cheaper AI models. Several Wall Street analysts agree . BMO Capital and Canaccord Genuity both put out notes Wednesday that said the latest developments could be positive for the group. Rieder also bought some hyperscalers, which refers to cloud computing companies that are heavily investing in data center infrastructure. While Rieder wouldn't say which specific stocks he purchased, Amazon , Google and Microsoft are all considered hyperscalers. In addition, he was a buyer of some of the chip companies that were overly hit on Monday. "I don't think this was an indictment on chip development or chip distribution," he said. "It was a statement on how much it may cost to create compute power." Overall, it should still be a good year for equities, which could see a 15% return for 2025, he said. "I don't think it's going to be a straight line," Rieder said. "[Monday] was a pretty good reminder that there's a lot of crowding into positions and there aren't that many equities that people are buying. So I think you've just got to be careful." Correction: DeepSeek said its open-sourced large language model cost less than $6 million to build. An earlier version misstated the figure.