Nvidia stock (NVDA) is beginning its slow rebound today following one of its worst single-day performances ever on Monday: courtesy of DeepSeek AI. The launch of the Chinese-owned AI startup’s latest AI technology caused a storm to hit the US stock market, specifically tech stocks. Nvidia, Microsoft, and other big AI investors saw their share values fall, with NVDA suffering the most. The leading chipmaker in the US is hoping to rebound, with today’s performance thus far indicating that will happen.
At press time, Nvidia stock is up 2%, returning to the $120 mark. NVDA shares fell as much as 17% yesterday, with the company’s market cap also tanking nearly $600 billion. That is far and away the worst single-day dropoff in US history. The fall came as US investors became fearful that US chipmakers were overspending on project development. DeepSeek claimed to have spent significantly less training its latest AI models, due in part to using fewer AI chips, which meant US firms were overspending on artificial intelligence infrastructure. That created a concern among the investment community that Nvidia’s high GPU (graphics processing unit, or AI chip) prices could come under pressure and that demand for semiconductors could wane.
Nvidia, Stock Investors Still Bullish
Nvidia itself didn’t express much concern over the DeepSeek buzz, calling R1 “an excellent AI advancement” in a statement Monday. According to Wall Street analysts, DeepSeek AI provides hefty competition, but shouldn’t hammer Nvidia too much in the long term. Several expressed skepticism over DeepSeek’s reportedly low costs for training its AI models and the implications for AI stocks.
JPMorgan analyst Harlan Sur and Citi analyst Christopher Danley said in separate notes to investors that DeepSeek used a process called “distillation.” This process relies on Meta’s (META) open-source Llama AI model to develop its model — the low spending cited by the Chinese startup (under $6 billion to train its recent V3 model) did not fully encompass its costs. “We believe it is crucial to validate these costs before drawing conclusions,” Sur wrote.
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Citi’s Danley added: “Given Deepseek is based on leveraging cloud service providers [Meta] and AI is still in its infancy, we lean towards the argument of continued strong growth in AI spending.” Other analysts are also considering this as a “buy opportunity” for NVDA stock, with shares dipping despite bullish projections for the rest of 2025.
Furthermore, Barclays analyst Raimo Lenschow stands by Nvidia. “We think investors need to differentiate between the impacts around potential benefits and drawbacks of DeepSeek for the software industry. More powerful LLM models that can run at a fraction of the original cost estimates (if confirmed) will mean that genAI adoption should come easier … and hence, faster and broader across the software universe,” Lenschow wrote in a note.
