Nvidia shares resume fall despite gains in European chip stocks

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Nvidia shares fell on Wednesday even as chipmakers in Europe and Asia rebounded following strong earnings from Dutch group ASML.

The US chipmaker fell 4.8 per cent in New York ahead of a flurry of Big Tech earnings later in the day, having rebounded nearly 9 per cent in the previous session. That followed a sharp sell-off on Monday that wiped close to $600bn off its market value, sparked by the release of a reasoning model from Chinese start-up DeepSeek.

Wednesday’s decline came despite retail investors ploughing more than $900mn into Nvidia shares this week. The S&P 500 index was down 0.3 per cent, while the Nasdaq Composite fell 0.6 per cent.

The sudden introduction of a cheap AI tool such as DeepSeek could affect the pricing power and market valuations of megacap US tech groups, say analysts. 

“We expect elevated volatility as market participants re-evaluate the longer-term earnings potential of companies in the AI value chain,” said Deutsche Bank strategists in a note to clients.

“This may take weeks or even months as analysts readjust their earnings projections,” they added.

Shares in ASML, one of Europe’s biggest tech companies, closed up 5.5 per cent in Amsterdam as chief executive Christophe Fouquet hailed the emergence of DeepSeek as “good news” for the semiconductor industry.

ASM, another chip stock, closed up 3.5 per cent, while the Stoxx Europe 600 Technology index was up 2.4 per cent. The Stoxx Europe 600 benchmark gained 0.5 per cent.

“For AI to be everywhere, we need to see major progress on cost and energy consumption,” Fouquet said, alluding to DeepSeek’s claims that its artificial intelligence model required far fewer chips to build and is also cheaper to run than larger systems from the likes of OpenAI.

Investors are still trying to figure out the market implications of DeepSeek’s promise to develop AI tools at a fraction of the cost of US rivals, which has been called a “Sputnik moment” for the industry.

But analysts say Monday’s sell-off was exacerbated by the sheer scale of investors’ previous bets on Nvidia, the chief beneficiary of the AI boom in markets.

“What happened on Monday was an extreme overreaction that was amplified by extreme positioning,” said Elyas Galou, global investment strategist at Bank of America.

He pointed to crowded positions in global tech stocks heading into US President Donald Trump’s inauguration and ahead of this week’s earnings from tech bellwethers including Meta and Microsoft.

“We saw a lot of buying yesterday, including from retail investors, which is supporting the market today,” he added.

The rise in ASML’s shares came after it reported stronger than expected orders of its most advanced chipmaking equipment.

Fouquet predicted that there would be more DeepSeek-style shocks in the coming months or years. “You cannot have an industry with this amount of opportunity without the key players being challenged,” he said. “I don’t think you can define today who is the winner in 2030.”

He said new entrants such as DeepSeek would accelerate the rollout of the technology.

“Anyone that lowers costs is in fact good news for us,” Fouquet said. “Because lower costs mean AI can be used in more applications, more applications mean more chips. And we are in the business of providing equipment to people who make chips.”

Earlier, Japan’s tech-heavy Nikkei 225 closed up 1 per cent, helped by a rebound in semiconductor stocks and AI investor SoftBank.

In Tokyo, Nvidia supplier Advantest closed up 4.4 per cent while semiconductor company Tokyo Electron was up 2.3 per cent. SoftBank ended the day with a 2.4 per cent rise.

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