Recovery in the Markets after AI Turbulence – Nvidia Leads Recovery

1/30/2025, 9:17 AM

Nvidia leads a recovery in the tech markets as investors reassess the impact of DeepSeek on the AI industry.

Eulerpool News Jan 30, 2025, 9:17 AM

After the crash on Monday, the markets stabilized on Tuesday, while Nvidia led the recovery on Wall Street. The Nasdaq Composite rose by 2 percent after falling by 3.1 percent the previous day. Nvidia gained almost 9 percent, recovering part of the dramatic 17 percent drop that wiped out around 589 billion US dollars in market capitalization on Monday.

The downturn was triggered by the advances of the Chinese AI start-up DeepSeek. Its newly introduced model, trained at significantly lower costs than its US competitors, had raised doubts about the necessity of gigantic investments in AI infrastructure. However, analysts described the market reaction as exaggerated. "The extent of the losses at Nvidia, Broadcom, and Marvell was probably overblown and could, in retrospect, prove to be a buying opportunity," commented Timothy Arcuri of UBS.

The S&P 500 gained 0.9 percent, while European markets also stabilized. The Stoxx Europe 600 rose by 0.4 percent. In Asia, however, the situation remained mixed: The Nikkei 225 closed down 1.4 percent, weighed down by further losses from Japanese chipmakers. SoftBank shares fell by 5.2 percent, after the US-listed chip designer Arm Holdings, in which SoftBank holds an 88 percent stake, lost 10 percent on Monday.

In the currency markets, the US dollar increased by 0.6 percent after US President Donald Trump reportedly demanded even more drastic import tariffs than the 2.5 percent sought by Treasury Secretary Scott Bessent.

The uncertainty about future market distribution in the AI sector remains.

In Hong Kong, Chinese technology stocks recorded gains, while chip producer SMIC fell 0.4 percent. The Hang Seng Index rose by 0.1 percent, led by Tencent and Baidu, which gained 1.4 and 3.6 percent respectively.

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