Nvidia Rallies 6.4% After Record Market Value Loss
Nvidia’s stock price surged 6.4% on Tuesday, recovering some of the losses it suffered on Monday after a cheaper, open-source artificial intelligence model from China was released. The stock had plummeted 17% on Monday, wiping out over $595 billion from the company’s valuation, the largest single-day market cap decline on record.
The sell-off was triggered by concerns that the emergence of the AI model, developed by Chinese startup DeepSeek, could burst the AI stock bubble. DeepSeek’s model reportedly outperformed OpenAI’s in different tests and was built at a fraction of the cost, sparking fears that major U.S. tech companies like Nvidia could be disrupted.
However, most Wall Street analysts have stood by Nvidia, with none downgrading the stock so far. Some analysts see the DeepSeek developments as a long-term positive for AI, as more powerful models can run at a lower cost, making it easier for companies to adopt them.
Despite the endorsements, Nvidia’s shares are still down 23% from their all-time high reached earlier this month. The company’s CEO, Jen-Hsun Huang, has called DeepSeek’s R1 model “an excellent AI advancement” and highlighted the potential for new models to be created using the technique.
The rally in Nvidia’s stock on Tuesday was accompanied by a bounce in the broader tech industry, with the S&P 500 and Nasdaq trading into the green. Retail investors also bought the dip at a record level, according to Vanda Research.