Nvidia stock rises after DeepSeek AI triggers record drop

Nvidia shares rose 2% in Frankfurt on Wednesday, signaling a possible recovery after a steep 17% drop on Monday that erased nearly $600 billion in market value.

The selloff, triggered by the rise of China's DeepSeek AI tool, had also impacted other AI-related stocks, but investors returned to the market as European technology stocks rebounded.

On Monday, Nvidia recorded the largest single-day market capitalization loss for any company as AI-linked stocks fell sharply. The launch of DeepSeek’s AI assistant, which quickly overtook OpenAI’s ChatGPT on Apple’s App Store, signaled growing competition and raised concerns over lower development costs in the AI sector.

By Tuesday, Nvidia shares recovered 8.9% in the U.S., with options traders showing renewed interest. More than 5.4 million Nvidia options contracts traded by mid-afternoon Tuesday, nearly double the usual volume. Short sellers of AI-related stocks made record profits, with Nvidia short positions earning $6.6 billion on Monday, while bets against Broadcom yielded over $2 billion.

Other AI-related firms, including Super Micro, Equinix, and Vistra, also saw significant losses, with combined short-seller profits exceeding $900 million. Despite Monday’s losses, market sentiment stabilized by Wednesday as investors turned their focus to upcoming earnings from Nvidia, Apple, and Microsoft.