Tue Jan 28 17:38:30 UTC 2025: ## Nvidia’s Stock Plunge and Market Rebound After DeepSeek’s AI Threat

**New York/Mumbai, January 29** – Wall Street experienced a dramatic rollercoaster ride this week, fueled by concerns over the Chinese AI startup DeepSeek and its potential to disrupt the US tech dominance.

Nvidia, the world’s most valuable chipmaker, suffered a record-breaking $589 billion market rout on Monday after a 17% share price drop. This followed the release of DeepSeek’s advanced, low-cost AI model, which is seen as a competitive alternative to offerings from OpenAI and Meta. The selloff triggered a broader tech downturn, with the S&P 500 falling 1.5% and the Nasdaq 100 dropping nearly 3%. The dramatic drop was the largest one-day loss in US stock market history for a single company, surpassing even Nvidia’s previous record fall in September. This event also raised concerns about overinvestment in AI by US companies.

However, markets rebounded sharply on Tuesday. Nvidia’s shares recovered close to 5%, and Microsoft, which is reportedly in talks to acquire TikTok’s US operations, saw a 1.7% increase. Increased trading volume in the S&P 500, 40% above the monthly average, indicated a strong response from dip buyers. The tech sector’s recovery reduced demand for haven assets, leading to slight losses in bonds.

Analysts are divided on the long-term implications of DeepSeek’s success. While some, like Solita Marcelli at UBS Global Wealth Management, emphasize the enduring nature of AI and the need for diversified investment strategies, others express concern about the potential slowdown in growth for leading tech companies. Upcoming tech earnings reports are expected to reveal a significant deceleration in growth compared to previous quarters.

The Federal Reserve’s two-day meeting this week adds another layer of uncertainty, with investors keenly awaiting Chairman Jerome Powell’s insights into inflation trends. The situation highlights the volatility in the tech sector and underscores the ongoing debate about the strategic implications of China’s rapid advancement in AI. Meanwhile, in India, the Traders Gurukul is holding its monthly “BOTS” options trading summit, offering insights into the fluctuating markets.

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