Finance
Nvidia is rebounding after biggest market cap loss in history, but it’s a fragile bounce
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.
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 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,” wrote Barclays analyst Raimo Lenschow.
To be sure, while Morgan Stanley’s Joseph Moore kept his overweight rating on the stock, he did trim his price target to $152 from $166 on Tuesday.
“The DeepSeek release highlights evolutionary innovations in AI, some of which may be deflationary. That said, the stock market reaction is probably more important than the cause, and could bring further export controls or reduce spending enthusiasm; trimming PTs but remain positive,” he said.
OpenAI CEO Sam Altman speaks next to SoftBank CEO Masayoshi Son after U.S. President Donald Trump delivered remarks on AI infrastructure at the Roosevelt Room in the White House in Washington on Jan. 21, 2025.
Carlos Barria | Reuters
OpenAI is in talks to raise up to $40 billion in a funding round that would lift the artificial intelligence company’s valuation to as high as $340 billion, CNBC has confirmed.
Masayoshi Son’s SoftBank would lead the round, contributing between $15 billion and 25 billion, according to two people familiar with the negotiations who asked not to be named because the talks are ongoing. SoftBank would surpass Microsoft as OpenAI’s top backer.
The Wall Street Journal was first to report on the talks.
Part of the funding may be used for OpenAI’s commitment to Stargate, a joint venture between SoftBank, OpenAI and Oracle that was introduced by President Donald Trump last week, the sources said. The plan calls for billions of dollars to be invested in U.S. AI infrastructure.
OpenAI was last valued at $157 billion by private investors. In late 2022, the company launched its ChatGPT chatbot and kicked off the boom in generative AI. OpenAI closed its latest $6.6 billion round in October, gearing up to aggressively compete with Elon Musk’s xAI, as well as Microsoft, Google, Amazon and Anthropic.
Meanwhile, Chinese startup lab DeepSeek is blowing up in the U.S, presenting fresh competition to OpenAI. DeepSeek saw its app soar to the top of Apple’s App Store rankings this week and roiled U.S. markets on reports that its powerful model was trained at a fraction of the cost of U.S. competitors.
At an event in Washington, D.C., on Thursday hosted by OpenAI, CEO Sam Altman said DeepSeek is “clearly a great model.”
“This is a reminder of the level of competition and the need for democratic Al to win,” he said. He said it also points to the “level of interest in reasoning, the level of interest in open source.”
Tax Fraud Blotter: No Alternative
IRS urged to do more to protect whistleblowers despite NDA
Stocks making the biggest moves after hours: AAPL, INTC, TEAM, DECK
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Personal Finance1 week agoMortgage rates aren’t likely to fall any time soon — here’s why
-
Personal Finance1 week agoRecruiters weigh in if LinkedIn’s ‘open to work’ feature helps or hurts
-
Finance7 days agoDEI dominates conversation among CEOs
-
Finance1 week agoBitcoin will hit a new all-time high in 2025, Binance CEO says
-
Economics6 days agoE-Waste Management Solutions and the Circular Economy
-
Accounting6 days agoCash Flow Management and Strategies for Financial Stability and Growth
-
Economics6 days agoTom Homan, unleashed
-
Economics1 week agoMinimum payments on credit cards hit record level as delinquencies also rise