Nvidia’s shares rally in Europe after a drop due to competition from China’s DeepSeek AI tool. European tech stocks also see a boost, driven by ASML’s strong performance.
On January 29, 2025, Nvidia‘s shares rose in Europe, following a strong recovery in U.S. markets after the company’s stock plunged earlier in the week. The global leader in artificial intelligence (AI) computing technology saw its Frankfurt-listed shares increase by 2%, following an 8.9% rise in its U.S. market value on January 28, 2025. This rebound comes after a steep decline triggered by the rapid rise of China’s DeepSeek AI tool, which emerged as a competitor to established players like OpenAI’s ChatGPT.
Nvidia’s chips are crucial to the development of AI, and the recent drop in stock prices was caused by concerns that DeepSeek’s AI tools might challenge Nvidia’s dominance. On January 27, 2025, Nvidia suffered a dramatic 17% fall, wiping nearly $600 billion from its market value, marking the largest single-day drop in market capitalization in history.
The rally in Nvidia shares also helped lift the broader European tech market. Other tech stocks like ASML, a Dutch company that manufactures essential semiconductor tools used in AI, surged by 11% after reporting an unexpected rise in bookings for their products. Additionally, shares of chipmakers such as BE Semiconductor and ASM International also saw gains.
Jacques-Aurélien Marcireau, co-head of equities at Edmond de Rothschild Asset Management, noted that Nvidia’s impact on the market extends beyond its own performance.
Nvidia carries with it more than $10 trillion of market cap from affiliated companies, whether they’re working on industrial equipment or supplying to Nvidia. So, it’s not just one company, it’s a whole galaxy.”
DeepSeek, which launched a free AI assistant last week, has raised eyebrows with its competitive pricing and performance. It quickly surpassed OpenAI’s ChatGPT in the U.S. App Store, challenging the notion that China is lagging behind the U.S. in AI development. However, as the market stabilizes, investors are refocusing on upcoming earnings from major U.S. tech companies, including Nvidia, Apple, and Microsoft.
Despite the uncertainty, analysts like Chris Weston from Pepperstone remain optimistic, suggesting that the arrival of DeepSeek might lead to new demand for Nvidia’s graphics processing units (GPUs), which are crucial for AI development. Meanwhile, Microsoft and OpenAI are investigating whether DeepSeek improperly used data from ChatGPT’s technology.
As markets recalibrate, it seems Nvidia’s role in the AI ecosystem remains a driving force for the tech sector’s recovery.
