Nvidia (NVDA) led a recovery in global chipmaker stocks as investors piled back into positions following Monday’s steep selloff in the wake of the release of China AI startup DeepSeek’s R1 model.
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Shares of NVDA rose almost 9% in New York on Tuesday before extending gains in Frankfurt on Wednesday, with US–pre-markets also indicated higher as investors chose to buy into what Wedbush analyst Dan Ives described as a “golden buying opportunity.”
The rally, which recovered some of the almost $600 billion in market capitalization lost the day before, was slow to start on Wall Street yesterday but gradually confidence returned and the shares rose steadily, prompting recovery among Asian chipmakers overnight.
In Japan, Advantest (AYEYY) rose over 4%, while Tokyo Election (TOELY) rose more than 2%. Shares of AI investor SoftBank Group (SFTBY) also climbed by 2.43%, amid reports it would lead a $500 million investment in AI robotics startup Skild AI.
Gains for chipmakers lifted the tech-heavy Nikkei 225 to finish the session up 1%.
Meanwhile, ASML (ASML) led the Stoxx 600 higher as it posted better-than-expected quarterly sales. Shares of the critical chip toolmaker advanced about 11% and added to the upbeat mood.
Analysts Sound Optimistic on Chipmakers
While NVDA surged 9%, other U.S.-listed chipmakers rallied. Broadcom (AVGO) rose 2.57%, while TSMC (TSMC) rallied over 5% and extended gains in Wednesday’s pre-market. Oracle (ORCL), another stock caught up in the DeepSeek chaos, rose 3.61% and also furthered gains in the pre-market.
Tigress Financial analyst Ivan Feinseth upgraded NVDA to a Strong Buy from Buy with a price target of $220, up from $170, arguing Monday’s selloff was a “major buying opportunity.”
He believes the actual capabilities of DeepSeek’s R1 AI model are unknown, and says there are “tremendous concerns about security.”
JPMorgan analyst Harlan Sur said the recent efficiency gains demonstrated by DeepSeek would serve to pull forward the adoption and scaling curve for inferencing and create a “faster unlock” of demand for higher performance artificial intelligence semiconductor solutions.
“The bottom line is that innovation does not stop; it catalyzes new opportunities,” he said.
Stone Fox Capital reckons DeepSeek’s main achievement is to lower costs and has probably created a more favorable environment for faster AI adoption and therefore demand for chips. The investor suggests the cost of development was probably closer to $1.5 billion, making their R1 model significantly more expensive than the $5.6 million indicated by the company.
“Nvidia is relatively cheap with either DeepSeek misleading the market on the GPUs used to build the R1 model, or tech experts accurate about Jevons Paradox where AI chip demand will only grow,” said Stone Fox in a note.
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