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Nvidia stock recovers after historic $600 billion market cap loss

Nvidia stock recovers after historic $600 billion market cap loss
Nvidia stock bounces back after record $589 billion market wipeout

​Nvidia (NVDA) stock regained some ground Tuesday, rising as much as 2.6% in premarket trading before paring gains to less than 1% after the market opened.

The modest rebound follows a record-breaking single-day market cap loss of $589 billion on Monday, marking the largest such decline in stock market history, reports Yahoo!Finance.

The sell-off was triggered by investor concerns over Chinese AI startup DeepSeek’s cost-effective AI model, which raised questions about the pricing and demand for Nvidia's high-end AI chips.DeepSeek claimed its latest model, developed using less expensive Nvidia H800 chips, could perform comparably to Western counterparts while significantly reducing training costs.

Industry and Market-Wide Implications

The DeepSeek announcement shook investor confidence across the semiconductor and tech sectors. Nvidia shares dropped 17% on Monday, leading a broader decline in chip stocks. The Nasdaq fell 3% as market sentiment soured on AI-related expenditures.

Other chipmakers also felt the pressure but showed signs of recovery on Tuesday. Broadcom (AVGO), which fell sharply alongside Nvidia, rose as much as 3% in premarket trading and was up slightly after the market opened.

Despite the market reaction, Nvidia struck a measured tone, calling DeepSeek’s R1 model “an excellent AI advancement” in a statement Monday, signaling no immediate plans to alter its pricing or strategy.

Outlook: Balancing Innovation and Competition

As the AI landscape evolves, Nvidia faces challenges from cost-efficient competitors like DeepSeek and broader concerns about the sustainability of high infrastructure spending in AI. While the company's technology remains at the forefront of AI development, pressure to adapt its pricing and business model may intensify as alternatives emerge.

Nvidia begins a cautious recovery after historic market cap losses, but questions linger over its pricing strategy and AI sector leadership amid rising competition.

​​Additionally, shares of Nvidia Corp. and ASML Holding NV plunged on Monday as the Chinese AI startup DeepSeek showcased its latest model, posing a competitive threat to Western AI giants.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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