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TAKEAWAYS KEY
- Nvidia and other artificial intelligence stocks at the forefront of the AI revolution are rebounding somewhat Tuesday after a selloff triggered by Chinese startup DeepSeek’s launch of a cutting-edge model at a fraction of the cost of its U.S. rivals.
- The Chinese company's launch of its low cost R1 model using less advanced chips cast doubt about the high valuation of a swath of stocks.
- Nvidia calls DeepSeek AI model by N “excellent AI advancement.”
Nvidia’s (NVDA), and other stocks that are at the forefront in the AI revolution, have recovered somewhat after a recent selloff triggered when Chinese startup DeepSeek launched a high-tech model for a fraction the price of their U.S. competitors.
Chinese companies’ launch of their low-cost R1 models using less advanced processors cast doubts on high stock valuations for a wide range of stocks from hyperscalers and chipmakers to power providers that has powered the AI explosion.
Nvidia’s shares have risen almost 2% since Monday after having fallen 17%. Taiwan Semiconductor Manufacturing Co. is also up nearly 2%. ASML Holdings, the Dutch manufacturer of semiconductor manufacturing equipment, fell almost 6% on Monday. ASML is now down nearly 2%.
Nvidia Applauds DeepSeek model
Nvidia’s DeepSeek AI model was described as an “analytical tool” in Investopedia. “excellent AI advancement” and "a perfect example of Test Time Scaling."
“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," a Nvidia spokesperson said.
"Inference requires significant numbers of NVIDIA GPUs and high-performance networking. We now have three scaling laws: pre-training and post-training, which continue, and new test-time scaling," the spokesperson added.
Broadcom’s (AVGO) shares, which had tumbled 17%, are gaining about 0.4% while those of Micron Technology (MU) are 1.4% lower.
Constellation Energy (CEG) and Vistra (VST), the nuclear power providers that had been seen as essential to powering AI data centers, were mixed. Constellation Energy is down around 2.5%, while Vistra, which had plunged almost 30% Monday, is rising around 5%,
The hyperscalers, such as Meta Platforms (META), Microsoft (MSFT) and Alphabet (GOOG), and Amazon (AMZN), which have spent billions of dollars purchasing the Nvidia’s AI platforms as they ramp up their infrastructure, were all rising under 1% . Meta and Microsoft will report their results on Wednesday.
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