Nvidia's stock dropped due to competition from DeepSeek in AI, but still potential for growth

From Nasdaq: 2025-02-10 21:00:00

OpenAI commercially launched ChatGPT on Nov. 30, 2022, marking the start of the AI revolution. Nvidia’s stock soared by 743%, adding $3 trillion in market value between Nov. 2022 and Jan. 2025. However, the emergence of DeepSeek, a Chinese start-up with a cost-effective AI platform, caused Nvidia’s stock to plummet.

DeepSeek impacted Nvidia by causing a $600 billion drop in market value, leading to uncertainty about Nvidia’s future. Apple, Microsoft, and Nvidia are the three most valuable companies globally, with Nvidia having the potential to reach a $4 trillion valuation first, given its strong AI infrastructure.

Microsoft’s stock faces vulnerability due to uncertainties in Azure’s performance and AI investments. The Jevons paradox suggests that AI development cost reductions could lead to increased demand for Nvidia’s services, potentially propelling the company to a $4 trillion valuation.

Investors should consider the impact of DeepSeek on Nvidia’s future performance before investing in the company’s stock. The Motley Fool Stock Advisor team has identified 10 top stocks for investment, excluding Nvidia. However, historical returns show the potential for significant growth in selected stocks.

John Mackey, former CEO of Whole Foods Market and an Amazon subsidiary, is on The Motley Fool’s board of directors. The Motley Fool holds positions in Amazon, Apple, Microsoft, and Nvidia, recommending long Microsoft calls and short Microsoft calls. The author discloses positions in Amazon, Apple, Microsoft, and Nvidia.



Read more at Nasdaq: Prediction: Even With DeepSeek’s Interruption, Nvidia Will Still Be the First Artificial Intelligence (AI) Stock to Reach a $4 Trillion Valuation. Here’s Why.