Investors are reassessing U.S. tech giants following the emergence of Chinese startup DeepSeek, whose AI technology reportedly matches the capabilities of early leaders at a lower cost. Nvidia’s fourth-quarter sales are estimated at $38.5 billion, with first-quarter guidance around $42.5 billion. Market options suggest an 8% share price swing if results deviate from expectations. “This earnings report isn’t just about Nvidia… It’s about whether the AI revolution can maintain its breakneck pace,” said Jacob Falkencrone, Saxo’s global head of investment strategy.
Concerns over DeepSeek impacting AI chip demand have eased as sources indicate Chinese firms are boosting orders for Nvidia’s H20 chip due to rising demand for affordable AI models. DeepSeek is also accelerating the launch of its R2 model, which could heighten U.S. government concerns about AI leadership as a national priority. The U.S.-China tech rivalry is expected to escalate under President Donald Trump’s administration, which plans stricter semiconductor export restrictions to China. Trump has already signed a memorandum limiting Chinese investments in strategic U.S. sectors.
In China, a government official claimed Taiwan aimed to gift its semiconductor industry to the U.S. as leverage for Washington’s support. Meanwhile, mainland China’s shares rose. In the U.S., Treasury yields rebounded after the Republican-led House advanced Trump’s $4.5 trillion tax-cut proposal, bolstering his 2025 agenda.
A weakening economic outlook persists, with investors increasing bets on further Federal Reserve interest rate cuts this year. Fed funds futures indicate over 50 basis points of easing priced in by year-end, up from 40 bps the previous week, pressuring the dollar.
— news from Reuters