Nvidia Stock Rebounds Slightly After Historic Drop Amid DeepSeek’s Impact

Feature and Cover Nvidia Stock Rebounds Slightly After Historic Drop Amid DeepSeek's Impact

The share price of Nvidia, a leading chip manufacturer for artificial intelligence (AI), experienced a modest recovery as U.S. stock markets reopened on Tuesday morning. Following a historic loss on Monday, Nvidia’s shares rose by 1.5% in early trading, signaling a slight rebound for the tech giant. Other major tech stocks also showed signs of stabilization after facing turbulence triggered by the emergence of a new Chinese AI app, DeepSeek.

On Monday, Nvidia made headlines with the largest single-day loss in U.S. market history. Its stock price plummeted by 17%, erasing more than $500 billion in market value. To put this into perspective, the loss was equivalent to the combined market valuations of ExxonMobil and MasterCard. Despite this setback, Nvidia remains one of the most valuable companies globally, with a market valuation exceeding $2.9 trillion. Currently, only Apple and Microsoft rank higher in terms of market capitalization.

The introduction of DeepSeek, an AI application developed in China, is believed to have shaken investor confidence in Nvidia and other tech firms. The app has quickly gained prominence for being developed at a fraction of the cost of its competitors while achieving remarkable success. It has already surpassed rivals like ChatGPT to become the most downloaded free app in the United States. DeepSeek’s rapid ascent has sparked concerns about the potential erosion of America’s dominance in the AI sector.

U.S. President Donald Trump weighed in on the situation, calling the rise of DeepSeek a “wake-up call” for the American tech industry. His comments underscored the urgency for the U.S. to maintain its technological edge amid growing competition from China.

The tech-heavy Nasdaq stock index, which saw a sharp decline of over 3% on Monday, showed slight improvement on Tuesday, rising 0.2% in early trading. Among major tech players, Alphabet, Google’s parent company, recorded a modest 0.1% increase, while Microsoft shares dipped by 0.6%.

DeepSeek’s impact on global markets extended beyond the U.S. On Tuesday, Japan’s Nikkei 225 index fell by 1.39%, reflecting investor jitters. However, Hong Kong’s Hang Seng index managed to post a small gain of 0.14%. Markets in Taiwan, South Korea, and China remained closed due to the Lunar New Year holiday.

The Lunar New Year also brought a temporary pause to DeepSeek’s activities. According to the South China Morning Post, the Hangzhou-based start-up, led by founder Liang Wenfeng, entered “holiday mode” as China began its week-long celebrations. The report noted that the company had gone “quiet” since its last update at midnight on Lunar New Year’s Eve. DeepSeek’s office building appeared deserted on Tuesday morning, with the start-up reportedly receiving an influx of uninvited visitors in recent days.

While DeepSeek enjoys its Lunar New Year break, the ripple effects of its emergence continue to be felt. Nvidia, as a key player in AI chip production, bore the brunt of the market’s reaction. Investors expressed concern over the competitive threat posed by DeepSeek, leading to a rapid sell-off of Nvidia shares on Monday. Despite this, Nvidia’s strong market position and its critical role in powering AI technologies have helped it retain its status as a tech giant.

The broader U.S. tech sector appears to have found some footing after Monday’s turmoil. Early trading on Tuesday suggested a degree of stability, though uncertainties surrounding DeepSeek and its implications for the global AI landscape remain. For now, Nvidia’s slight rebound offers a glimmer of hope for investors, but the challenges posed by rising Chinese competitors will likely keep the pressure on U.S. tech firms.

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