Nvidia Climbs back after AI Market Fears Subside
Nvidia (NVDA) stock was down in late January after Chinese company DeepSeek raised concerns about cheaper AI development methods. Now, it seems as though the market is no longer afraid.
The price of Nvidia stock is moving upward very quickly, with a 5.21% gain on Tuesday and indications that the climb will continue. This is good news for the company after DeepSeek AI development models showed that Nvidia tech could become obsolete soon.
When DeepSeek released their AI model, the market plummeted, with fears emerging that the current AI chip producers would be overshadowed by faster and cheaper options in the near future. That caused a major stock drop for Nvidia in particular, and the price of their stock fell from $147 to $118 in just a few days.
Nvidia stock is starting to make a recovery, though, and it is up to $125 ahead of the market opening on Thursday. We have seen the company’s stock prices improve over the last few days, with a bullish trend emerging.
Is the AI Market No Longer at Risk of a Shakeup
It would appear that fears over new AI models taking over are not quite as strong as they were last week. There were concerns from Nvidia that its clients would not invest as much in its chips and would go for cheaper options, but so far, nothing has come from these fears.
In fact, Alphabet (GOOG) has announced plans to spend $75 billion in 2025 on capital expenditures, with much of that going toward AI development costs. This is higher than what analysts predicted, which was a more conservative $58 billion. Combining the expected capital expenditures of Alphabet, Microsoft (MSFT), and Meta (META), analysts anticipate about $228 billion for 2025.
If DeepSeek was really onto something and had solid evidence that their model was the future of AI development, then there would be no need for these massive commitments in capital expenditures, but that is not the case right now. AI development for the future still appears to be very expensive, and, as many companies hope, very profitable.
Wednesday’s gains for Nvidia mark the largest ones in a while and point toward continuing increases in stock value. The DeepSeek story may not be over, but for now, Nvidia’s investors are enjoying a return back toward the previous highs. It should be noted that the last time Nvidia’s stock price was around $125 was back in October of last year.
ABOUT THE AUTHOR
See More
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals
Top Broker