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Nvidia shares jump after DeepSeek surprise sparked US market sell-off

Some analysts cite company’s possible role in DeepSeek’s success and call share price drop ‘overdone’

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A sign outside the New York Stock Exchange marks the intersection of Wall Street and Broad Street on Tuesday. Photo: AP
Robert Delaneyin Washington
American semiconductor giant Nvidia’s stock price erased some of its massive loss sustained a day earlier on fear that Chinese companies were poised to surpass America in the competition with China for artificial intelligence supremacy, as investors saw the company playing a key role in a sharper rivalry.

As of market close, the company’s shares recouped more than half of the loss they posted on Monday, their largest one-day drop ever, rising more than 8.8 per cent, to US$128.86.

The tech-heavy Nasdaq Composite rose more than 2 per cent after falling sharply on Monday, with technology stocks posting their worst one-day performance since 2020, as the early success of Chinese start-up DeepSeek’s AI models sparked concern that the amount of money large US tech companies are spending to develop the technology is being misallocated.

Some analysts see Monday’s sharp sell-off for Nvidia and the broader tech industry as “overdone” and point out that Nvidia’s chips may have been instrumental in DeepSeek’s success.

“There are reports praising DeepSeek’s performance, some experts say it’s impressive, others say it’s disruptive and Nvidia itself said that the company came up with something ‘excellent’ – using a lot of its less advanced chips,” said Swissquote Bank analyst Ipek Ozkardeskaya, who added that Monday’s sell-off may have been “overdone”.

“But beyond the fact that the company used less advanced and cheaper Nvidia chips to build its model, there are a lot of unanswered questions about DeepSeek, including whether its model could be integrated and used by other applications and whether the company really built a model for less than US$6 million,” Ozkardeskaya said.

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