Nvidia's recent rebound is largely attributed to the company's positive response to DeepSeek's AI advancements. Earlier today, Nvidia acknowledged DeepSeek's latest models as a significant AI innovation, emphasizing the potential for increased demand for its GPUs and high-performance networking products. This acknowledgment comes after Nvidia's stock experienced a historic drop due to concerns over DeepSeek's cost-effective AI model, which initially raised fears about reduced demand for Nvidia's advanced chips. However, Nvidia's statement suggests that the company views DeepSeek's innovation as an opportunity rather than a threat, potentially driving further adoption of Nvidia's technology in AI applications.
The market's reaction to Nvidia's stance has been positive, with shares showing signs of recovery. J.P. Morgan reiterated its Overweight rating on Nvidia, indicating confidence in the company's long-term prospects despite the recent volatility. Additionally, Nvidia's stock has been buoyed by a broader recovery in tech stocks, as investors reassess the impact of DeepSeek's developments on the AI landscape. The open-source nature of DeepSeek's model may also encourage further research and development, which could ultimately benefit Nvidia by expanding the AI ecosystem and increasing the demand for its products.
The Direxion Daily NVDA Bull 2X Shares ETF (NVDU) rose to $70.03, up 2.44% as of 10:00 AM ET on January 28th.