Nvidia and AI Stocks Rebound After DeepSeek Model Launch
Nvidia (NVDA) and other artificial intelligence (AI) stocks are experiencing a slight recovery in premarket trading on Tuesday following a sell-off triggered by Chinese startup DeepSeek's release of a low-cost, cutting-edge AI model.
DeepSeek's R1 model, which utilizes less advanced chips, has raised questions about the high valuations of chipmakers, hyperscalers, and power providers that have fueled the AI industry's growth.
Nvidia, which fell 17% on Monday, is now trading up nearly 2% in premarket. Other AI stocks, such as Taiwan Semiconductor Manufacturing Co. (TSM), are also showing gains. However, ASML Holding (ASML), a Dutch semiconductor equipment manufacturer, has declined more than 1%.
Despite the rebound, concerns remain about the impact of DeepSeek's model. Nvidia has acknowledged the model's advancement, describing it as a "perfect example of Test Time Scaling." The company emphasizes the continued importance of NVIDIA GPUs and high-performance networking for AI inference.
Other AI-related stocks are also showing positive movement. Broadcom (AVGO) and Micron Technology (MU) are gaining ground after significant losses on Monday. Nuclear power providers Constellation Energy (CEG) and Vistra (VST) are seeing gains, as they are seen as crucial in powering AI data centers.
Hyperscalers like Meta Platforms (META), Microsoft (MSFT), and Alphabet (GOOG) are experiencing modest gains. However, Amazon (AMZN) is down slightly.