Nvidia rally shows DeepSeek fears unfounded a year later

A year ago, the Chinese startup DeepSeek freaked out the stock market with the idea that developing artificial intelligence was much easier and cheaper than everyone imagined.

- CARMEN REINICKE

A DeepSeek AI sign at the Chinese start-up's office in Beijing last February.

(REUTERS)

But 12 months later, that’s turned out to be largely a mirage.DeepSeek erased a record $589 billion from Nvidia Corp's market value in one day after the company revealed an Al model thought to be comparable to those of OpenAI and Meta Platforms Inc but developed at a fraction of the cost. Nvidia’s double-digit plunge led the S&P 500 Index 1.5% lower, while the tech heavy Nasdaq 100 Index shed 3%. Even energy and utilities stocks like Vistra Corp and Constellation Energy Corp, which benefit from the technology's buildout, sold off.

Just 24 hours later, though, Nvidia shares rebounded, erasing some its losses as investors rushed to buy the dip. Over the following days and weeks, investor concern waned as reports showed that DeepSeek’s model wasn't as much of a competitive threat as first feared.

“The initial reaction was ‘oh my God, this could be done way cheaper and these companies are in trouble, and Nvidia's not going to be able to sell these expensive chips,” said Eric Diton, president and managing director of Wealth Alliance. “Here we are a year later, and that's just obviously not true. Nvidia's growth rate continues to just defy all logic.”

Shares of Nvidia, which contributed to the lion’s share of the S&P 500’s advance in 2025, are now up 58% since the DeepSeek selloff.