Nvidia stock rose early Tuesday as the AI chipmaker began to recover from a massive decline the prior day that shaved nearly $600 billion off its market cap.

A new Chinese AI model threatens to diminish the need for Nvidia’s most-expensive chips, but some say the concerns are overblown.

Nvidia on Monday said Chinese AI firm DeepSeek's advances show the usefulness of its chips for the Chinese market and that more of its chips will be needed in the future to meet demand for DeepSeek's services.

Nvidia Corp., the biggest provider of chips used to train artificial intelligence software, said a new model released by Chinese startup DeepSeek is an “excellent AI advancement” that complies with US technology export controls.

One of the biggest beneficiaries of this trend is Nvidia (NASDAQ: NVDA), which pioneered the graphics processing units (GPUs) that have become the gold standard for running AI systems. However, reports emerged recently that suggested a Chinese start-up had cracked the code for developing strong AI systems while using inferior chips and novel training processes.

Since the start of 2023, Nvidia's (NASDAQ: NVDA) stock has gained an astronomical 906% as of the time of writing. While this is common investor thinking, it's caused many (including myself) to miss a large chunk of Nvidia's rise.