After Monday's dramatic crash, tech stocks made a solid recovery in Tuesday’s premarket. Nvidia Corp. NVDA led the way, climbing 5.29% to $124.91, with Broadcom Inc. AVGO not far behind, gaining 4.82% to $211.87. Advanced Micro Devices Inc. AMD and Intel Corp. INTC also posted modest gains of 1.90% and 1.87%, respectively, as the sector began to stabilize.
What Happened: The sell-off on Monday was triggered by news from Chinese AI startup DeepSeek, which unveiled a cost-efficient AI model that outperformed competitors like OpenAI and Meta Platforms Inc. META at a fraction of the cost.
This announcement rattled investors, sending Nvidia's stock into a historic plunge that wiped out nearly $600 billion in market value.
The tech recovery came after analysts were quick to call the market's reaction an overreach. Analysts believe advancements like these could drive even more investment in AI infrastructure, pushing the industry closer to major milestones like artificial general intelligence.
Gene Munster of Deepwater Asset Management argued that the demand for AI infrastructure would only keep growing. Fundstrat's Tom Lee also sees the sell-off as an opportunity for investors, comparing it to Nvidia’s March 2020 decline, which proved to be a significant entry point for investors.
Meanwhile, OpenAI CEO Sam Altman has acknowledged the impressive performance of DeepSeek’s R1 model, expressing enthusiasm about the competition and speaking about OpenAI’s plans to introduce even more advanced models in the future.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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