Nvidia shares rebound 5% after $600-billion DeepSeek mauling

On January 27, the tech stock fell close to 17 percent, wiping out $589 billion in the biggest share fall since 2020

US chip maker Nvidia’s share price rebounded close to 5 percent in the early hours of trading on January 28, a day after one of the world's most valuable company witnessed a $589 billion market rout amid concerns over Chinese AI startup DeepSeek, which threatens to dismantle US' dominance in the emerging tech space.

Equities rebounded as dip buyers stepped in. Trading volume in the S&P 500 was 40 percent above the average of the past month. Nvidia Corp. rallied 5.09 percent, following its largest value loss in history. Microsoft Corp. is in talks to acquire the US arm of ByteDance Ltd.’s TikTok, President Donald Trump said Monday night. The shares were up 1.7 percent Tuesday. The bounce in the tech space also reduced the search for haven assets, with bonds seeing small losses.

The relative sense of calm on Wall Street comes after a rough start to the week on concern that a cheap artificial intelligence-model from Chinese startup DeepSeek could make valuations of the technology that has powered the bull market tough to justify.

“AI is here to stay, and if anything, DeepSeek reinforces that,” said Solita Marcelli at UBS Global Wealth Management. “However, the latest developments do also show that investment approaches that are too concentrated or overly passive can be risky, as value can quickly shift within the AI ecosystem. An active and diversified approach is a better way to gain exposure to AI, in our view.”

DeepSeek's LLM success triggers big debate: Is India's hesitation a strategic mistake?

The tech reporting period that kicks off Wednesday may prove sobering for equities bulls: While earnings from the so-called Magnificent Seven behemoths are still rising — and far outpacing the rest of the market — Wall Street anticipates a marked slowdown in growth relative to prior quarters. What it comes down to is that pressure is mounting on the cohort, which has driven a torrid rally in the Nasdaq 100 Index since the end of 2022.

And as the Fed’s two-day meeting begins, investors have accepted that the central bank probably won’t be cutting interest rates this time. But with the stock market at a tenuous point, what they’re looking for is any signal from Chairman Jerome Powell on which way inflation is going.

On January 27, the tech stock fell close to 17 percent, wiping out $589 billion in the biggest share fall since 2020 on concerns of investors over Chinese artificial-intelligence startup and OpenAI rival DeepSeek, which was developed at a fraction of its US counterpart’s cost. The decline eclipsed the previous record — a 9 percent drop in September that erased about $279 billion in value — and was the biggest in US stock-market history.

Meta and Microsoft show AI spending can be a double-edged sword

The drop rippled through the rest of the market due to how much weight Nvidia has in major indexes. Including Monday’s slump, Nvidia selloffs have caused eight of the top ten biggest one-day drops in the S&P 500 Index, based on market value, according to data compiled by Bloomberg. The S&P 500 fell 1.5 percent Monday and the Nasdaq 100 tumbled nearly 3 percent.

The semiconductor maker led a broader selloff in technology stocks after DeepSeek’s low-cost approach reignited concerns that big US companies have poured too much money into developing artificial intelligence. The Chinese firm appears to provide a comparable performance at a fraction of the price.

The latest AI model of DeepSeek, released last week, is widely seen as competitive with those of OpenAI and Meta Platforms Inc. The open-sourced product was founded by quant-fund chief Liang Wenfeng and is now at the top of Apple Inc.’s App Store rankings.