Nvidia is rebounding after biggest market cap loss in history, but it’s a fragile bounce
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Nvidia CEO Jensen Huang delivers a keynote address at the Consumer Electronics Show (CES) 2025, showcasing the company’s latest innovations in Las Vegas, Nevada, USA, on January 6, 2025. Artur Widak | Anadolu | Getty Images Nvidia shares traded higher in the premarket Tuesday, as traders reassessed the implications of a much cheaper-to-build large-language model for the artificial intelligence trade. The chipmaker’s rebound in the early session was shaky, with it up about 3.7%. The stock’s bounce was much bigger earlier in the morning and was reducing as the open neared. The stock plunged 17% on Monday and slashed more than $595 billion from the company’s valuation, the biggest single-day market cap decline on record. Stock Chart IconStock chart icon Nvidia 1-day Monday’s steep sell-off — which sent shockwaves across the broader tech industry, with Nasdaq Composite dropping 3% — came as traders grew fearful that an AI stock bubble could burst due to the emergence of Chinese startup DeepSeek. DeepSeek last week released an open-source model that reportedly outperformed OpenAI’s in different tests. The company also said the initial version of this model cost less than $6 million to build — a fraction of the billions of dollars major U.S. tech companies are spending on AI. To be sure, Nvidia — which has been the posterchild of the U.S. AI trade due to its high-powered chips — called DeepSeek’s R1 model “an excellent AI advancement.” “DeepSeek’s work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant,” an Nvidia spokesperson told CNBC on Monday. Additionally, most Wall Street analysts stood by Nvidia after the sell-off, with none of them downgrading the stock thus far. Some also see the DeepSeek developments as a long-term positive for AI. “We think…
Filed under: News - @ January 28, 2025 12:25 pm