Key Takeaways Nvidia shares tumbled Wednesday, dashing hopes for a quick recovery from losses earlier in the week amid concerns about competitiveness of American AI firms and their spending on artificial intelligence.

Nvidia shares' 9% recovery Tuesday was the second-best day in terms of market cap added for any company ever, trailing only a record it set in July.

Chuck Zodda, managing partner and Chief Investment Officer from the Armstrong Advisory Group discusses the dip of tech stocks, especially Nvidia after the announcement of Chinese AI start-up DeepSeek.

DeepSeek stunned the tech world with the release of its R1 "reasoning" model, matching or exceeding OpenAI's reasoning model for a fraction of the cost.

Global investors are worried the emergence of a low-cost Chinese AI model will threaten the dominance of AI leaders.

The market reaction proved particularly severe for Nvidia (NASDAQ: NVDA), with shares plummeting and erasing half a trillion in market cap at the time of this writing. To put this staggering figure in perspective,

Nvidia stock declined on Wednesday, even as strong earnings from ASML Holding lifted shares of other chip makers. Shares of Nvidia made a strong 9% comeback Tuesday after a 17% drop on Monday. However,

Chip stocks in the U.S. and Europe rose on Wednesday for a second straight day, recovering from a punishing selloff triggered by China's low-cost DeepSeek artificial intelligence tool at the start of the week.

Nvidia staged a moderate rebound on Tuesday, rising as much as 3%, following a 17% drop the prior day. More broadly, major US indexes rallied after the S&P 500 and Nasdaq 100 saw sharp losses on Monday amid concerns over the Chinese AI firm DeepSeek's rapid and seemingly cost-effective advances.