Nvidia Rebounds Premarket After Historic Market Cap Loss

Nvidia (NVDA) shares rebounded 2.5% premarket Tuesday following a massive decline on Monday. The AI chipmaker's recovery comes after a 17% plunge Monday triggered by concerns about a new AI model from Chinese startup DeepSeek.

DeepSeek's Impact

DeepSeek's model, trained at a cost significantly lower than Nvidia's, raised concerns that US firms may be overspending on AI infrastructure. This led to a broader market sell-off, with the tech-heavy Nasdaq dropping 3%.

Broader Market Recovery

Chip stocks across the board declined on Monday but began rebounding on Tuesday morning. Broadcom (AVGO) rose 3% premarket, while Micron (MU) climbed 1% after a 12% dip the previous day.

Nvidia's Response

Nvidia downplayed the DeepSeek concerns, calling its model "an excellent AI advancement."

Analyst Skepticism

Wall Street analysts remain skeptical of DeepSeek's low training costs. JPMorgan's Harlan Sur and Citi's Christopher Danley emphasize that DeepSeek leveraged Meta's open source AI model and relied heavily on cloud service providers.

However, Raymond James analyst Srini Pajjuri acknowledges DeepSeek's impressive competitiveness despite its limited compute access.

Conclusion

Nvidia's premarket rebound suggests some recovery from Monday's market sell-off. Analysts continue to monitor the impact of DeepSeek and its potential implications for AI spending.