Not just DeepSeek: Here's why Nvidia stock hasn't recovered
The stock market is unpredictable. Sometimes, bad news boosts a stock, while good earnings send it tumbling. That's just how the market works.
Take Nvidia, for example. The company is still reeling from the AI sector's shake-up after DeepSeek’s latest model release earlier this week. Even today, as Nvidia launches its highly anticipated RTX 5090 and 5080 graphics cards, its stock continues to slide.
Why could this be happening? Let's take a look.
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Nvidia RTX series delays
There is a strong demand online for Nvidia's new RTX 50 series graphics cards, but that doesn't necessarily translate to big sales. That's because Nvidia cannot keep store shelves stocked.
Many online retailers sold out of their supply within minutes. Scalpers are now selling Nvidia's graphic cards for a premium on the aftermarkets. Some retailers are informing customers to expect months of delays and backorders of the RTX 5090 and 5080.
While the demand is there, it's clear that's not the sole reason why Nvidia's RTX 50 series is impossible to find in stores. Many retailers received fairly low stock quantities, as Nvidia reportedly experienced manufacturing issues.
Overall, these issues may not be a reason for a stock to fall. But they do point to why Nvidia couldn't depend on the RTX 50 series release to help too much in its recovery.
DeepSeek's looming threat
U.S.-based AI companies like OpenAI and Nvidia are still reeling from the China-based startup's release of the DeepSeek-R1 AI model.
DeepSeek reportedly created an AI model that's at least on par with OpenAI's latest model. In addition, they say they did it with fewer resources in processing power and funding. It reportedly cost DeepSeek less than $6 million to create a model that OpenAI spent hundreds of millions on.
Few companies have benefitted from the AI boom in the U.S. than Nvidia, which supplies U.S. tech companies with processing power to build their AI models.
Although DeepSeek has done its damage, the looming threat is far from over. DeepSeek has released additional AI models for AI-generated images and is developing even more advanced models.
In addition, other China-based companies, such as Alibaba, have announced their own advanced AI models that are supposedly even more powerful than those already available.
Trump's Taiwan tariff threat
DeepSeek wasn't the only thing that hit Nvidia this week.
In a speech earlier this week, President Donald Trump announced a plan intended to move computer chip manufacturing from Taiwan to the U.S. What's the plan? Tariffs.
"In the very near future, we’re going to be placing tariffs on foreign production of computer chips, semiconductors, and pharmaceuticals to return production of these essential goods to the United States," Trump said in a speech.
"They left us and went to Taiwan," Trump said, referring to companies like Apple, Qualcomm, and Nvidia, which manufacture their chips in Taiwan.
Trump said the tariff could be as high as 100 percent. Trump's proposed tariffs could cause the price of these products to skyrocket for U.S. customers. In turn, companies like Nvidia would likely sell fewer products or make a smaller profit to compensate for the increased cost passed on to consumers.
