Nvidia Struggles To Rebound After DeepSeek Rout

Nvidia shares failed to recover Tuesday while US stocks traded lower, a day after the US chipmaker was battered on the emergence of a low-cost Chinese artificial intelligence venture.

About 20 minutes into trading, the Dow Jones Industrial Average fell 0.2 percent to 44,640.47, while the broad-based S&P 500 Index lost 0.3 percent to 5,996.35.

The Nasdaq Composite Index opened slightly higher initially but lost 0.2 percent at 19,313.44 in early trading.

The initial bounce is “very typical when you have significant drawdowns, especially when it’s driven by news that is still unraveling,” said Art Hogan, of B. Riley Wealth Management.

Nvidia, whose semiconductors power the AI industry, had its shares plunge nearly 17 percent on Wall Street a day earlier, erasing nearly $600 billion of its market value.

China’s DeepSeek, whose chatbot became the top-rated free application on Apple’s US App Store, said it spent just $5.6 million developing its model — a fraction of the billions US tech giants poured into their AI systems.

Hogan noted that “we’ll likely learn more about DeepSeek and its capabilities and the veracity of claims,” alongside what this means for the long-term investment environment for AI.

But despite the slump on Monday in tech stocks and especially among semiconductors, there were many positives under the surface, he added.

On Tuesday, the Federal Reserve also started a two-day policy meeting, while investors eyed a slate of corporate earnings including numbers from aviation giant Boeing and automaker General Motors. Both reported quarterly losses.