NVIDIA Stock Rebounds After AI-Driven Sell-Off

Key Points

* NVIDIA (NVDA) stock initially gained 2.6% premarket but pared gains after market open.
* Concerns about DeepSeek's low-cost AI model had triggered a 17% decline for NVIDIA on Monday.
* Wall Street analysts express skepticism about DeepSeek's training costs.

NVIDIA's Market Cap Loss

NVIDIA's 17% drop on Monday shaved nearly $600 billion from its market capitalization, making it the largest single-day loss in stock market history. The announcement from Chinese startup DeepSeek, which claimed to have developed an AI model with lower training costs, sparked concerns about the impact on NVIDIA's high-priced GPUs.

Analysts' Views

Wall Street analysts have weighed in on the situation, expressing doubts about DeepSeek's reported low training costs. JPMorgan's Harlan Sur and Citi's Christopher Danley cautioned that DeepSeek's use of Meta's open-source Llama model for its own model development may have understated its actual expenses.

Bright Spots

Despite the concerns, some chip stocks, including Broadcom (AVGO), showed signs of recovery on Tuesday premarket. NVIDIA itself remained somewhat unfazed by the DeepSeek news, describing the company's AI advancement as "excellent."

Outlook

Analysts continue to debate the implications of DeepSeek's announcement for the AI industry. While some remain skeptical about the company's claims, others suggest that the low-cost approach could drive continued growth in AI spending.