Nvidia shares soared nearly 9% on Tuesday, rebounding after a steep sell-off triggered by Chinese AI rival DeepSeek.
On Monday, Nvidia’s stock plunged nearly 20%, wiping out almost $600 billion in market value, as investors feared DeepSeek’s AI breakthrough could reduce demand for Nvidia’s chips.
What Happened?
- DeepSeek, a Chinese AI company, released a model that rivals OpenAI and Amazon’s AI systems.
- Investors panicked, fearing U.S. chip demand could drop.
- Nvidia’s stock suffered its biggest one-day loss ever.
Why Is Nvidia Recovering?
- Some experts believe the panic was overblown.
- A more efficient AI model could actually boost chip demand, not reduce it.
- The concept of Jevons Paradox suggests that increased efficiency can lead to higher overall demand.
With AI still expanding rapidly, Nvidia remains a major player in the market. The company’s recovery shows that investors may be adjusting their expectations after Monday’s shock.
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