Nvidia has managed to recoup some of its losses after a disastrous day of trading, which saw tech stocks across the board rocked by the entry of Chinese chatbot DeepSeek into the AI space.
Shares in the chip and software company opened at $126.48 on Wednesday. While down from $128.99 on Tuesday, this marks a 6.8 percent improvement from its closing price of $118.42 on Monday, a near four-month low.
The company has also tacked billions back onto its market capitalization, currently $3.07 trillion as of 10 a.m. ET, which fell by a record-setting $592 billion on Monday.
Newsweek reached out to DeepSeek via email for comment.
Why It Matters
Nvidia, the most valuable company in the world until Monday, was the main casualty of the mass sell-off, which swept chip and AI-linked stocks following the sudden entry of DeepSeek.
Still ranked as the top free app on the Apple App Store, after its release on January 20, DeepSeek’s developers claim they could make and train the chatbot at a far lower cost than analogous models, such as OpenAI‘s ChatGPT.
Nvidia logo displayed on a smartphone screen on December 10, 2024. Inset: DeepSeek logo displayed on a smartphone screen on January 28, 2025.
VCG/VCG via AP
The realization that this could be done despite export controls intended to limit China’s chip access led to the realization that America’s future dominance of AI was far from assured and prompted the shares of chipmaking giant Nvidia, whose graphics processing units (GPUs) are widely employed across the AI space, to plummet.
Other chipmakers, including Broadcom and Taiwan Semiconductor Manufacturing Company, also saw similar drops, with the market downturn spreading into the broader tech sector and hitting stocks like Microsoft and Google owner Alphabet.
What To Know
Some believe the Nvidia sell-off may have been caused by a realization that the increasing obsession with AI led to the overvaluation of many tech stocks. QCP Capital’s latest report attributed this to “the AI mania that defined 2024.”
Its recovery also hints that investors are “buying the dip” and cashing in on Nvidia’s temporarily muted share price while maintaining belief in the company’s fundamentals and status as one of the most significant players in the tech space.
Microsoft, meanwhile, bounced back to pre-DeepSeek levels on Tuesday and is up 0.1 percent over the past five days. Broadcom and Taiwan Semiconductors have also been making modest recoveries since Monday.
What People Are Saying
Former Google CEO and chairman Eric Schmidt and MakerMaker.AI CEO and cofounder Dhaval Adjodah, in a Tuesday column for The Washington Post: “There is clearly mounting pressure on America’s Big Tech players if DeepSeek can compete with them using far fewer resources. Export controls were aimed at choking off China’s access to the most advanced computer chips, impeding its ability to keep pace.
“But in fact, the relative dearth of high-performing chips in China might have pushed the nation’s companies and researchers to be more efficient and led them to uncover new methodologies that significantly reduce training costs.”
President Donald Trump called the release of DeepSeek a “wake-up call” for the American tech sector, adding that the company’s demonstration of cost-effective AI development “could be very much a positive development.”
OpenAI CEO Sam Altman said it was “invigorating to have a new competitor” in DeepSeek but expressed confidence that his firm’s future models would be more advanced.
Nvidia previously told Newsweekthat DeepSeek was “an excellent AI advancement.” The company also described it as “a perfect example of Test Time Scaling,” meaning the dynamic adjustment or optimization of a model during its testing phase to improve performance.
Silicon Valley venture capitalist Marc Andreessen described DeepSeek-R1 on X as “a profound gift to the world” and “AI’s Sputnik moment.”
What Happens Next
Nvidia stock has not quite rebounded to previous levels, still down some 12 percent since Friday. DeepSeek, meanwhile, may be facing trouble, as unnamed sources informed Bloomberg that Microsoft, a major investor in OpenAI, had launched an investigation into whether the company extracted data from OpenAI in potential violation of its terms of service.
White House AI and crypto czar David Sacks echoed these concerns, telling Fox News that “there’s substantial evidence that what DeepSeek did here is they distilled the knowledge out of OpenAI’s models,” adding that “I don’t think OpenAI is very happy about this.”
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