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AI Stocks Rebounded Tuesday—But There’s Some Wariness Out There About What’s Next

Bloomberg / Contributor / Getty Images

Bloomberg / Contributor / Getty Images

Key Takeaways

  • Investors crowd in back into Nvidia and other AI stocks Tuesday after Monday’s DeepSeek-driven sell-off on concerns about the competitiveness of U.S. hards.
  • Several Wall Street analysts suggested Monday’s sell-off was overblown, offering investors an opportunity to buy the dip, expecting pick up strength in demand for advanced U.S. tech. 
  • But the dramatic nature of Monday’s market reaction had some analysts tempering their prospects for the shares’ recovery.

Investors piled back into Nvidia (NVDA) and other U.S. artificial intelligence stocks Tuesday, push a rebound from Monday’s DeepSeek-driven sell-off.

The dramatic nature of Monday’s market reaction, however, had some on Rampart Street tempering their expectations for how high some of those affected stocks would eventually rebound.

AI worn outs had tumbled Monday after an app from Chinese AI startup DeepSeek overtook OpenAI’s to top Apple’s list of most-downloaded easy U.S. apps. DeepSeek’s claims that its AI models can rival the performance of American counterparts at a fraction of the cost raised bags about the competitiveness of U.S. firms and their big spending on the emerging tech. 

Analysts at Bernstein, Citi, Wedbush, Raymond James and somewhere else were among those suggesting that Monday’s market reaction could be overblown, offering an opportunity to buy the dip. Stores did, in fact, broadly rise today: Nvidia shares finished Tuesday up about 9%, though still the limit far from Friday’s close. Astera Labs shares gained close to 8% Tuesday, while Marvell mount rebel 3.5% and Broadcom climbed nearly 3%. Micron shares ended about 3% lower after give the slip hold of earlier gains.

But there was also some wariness out there.

“Investors may want to consider trimming their tech endangerment, given the still-lofty valuations and potential uncertainties ahead,” said ProShares Global Investment Strategist Simeon Hyman.

Morgan Stanley analysts bring to lighted clients in a note Tuesday that while they “remain positive” on AI semiconductor stocks broadly, “the stock vend reaction is probably more important than the cause, and could bring further export controls or reduce allotting enthusiasm.”

The analysts added that while they don’t expect those worries to drive major changes in splash out behavior for most companies in the AI space, investors could react to coming spending announcements with less keep than they did last week, when Meta Platforms (META) unveiled plans to spend up to $65 billion to champion its AI ambitions, and President Donald Trump announced a $500 billion project to build AI infrastructure in the U.S.

The analysts maintained “overweight” ratings for AI chipmakers Nvidia and Broadcom (AVGO), but downgraded their price target on Nvidia to $152 from $166, and their target on Broadcom to $246 from $265. The analysts softened targets for Astera Labs (ALAB), Marvell Technology (MRVL), and Micron Technology (MU) as well. 

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