Nvidia (NVDA) and other chip stocks plummeted on Thursday as concerns over tightening U.S. trade policies and rising competition in artificial intelligence (AI) applications from China pressured the sector.

These companies are widely regarded as AI darlings in China. Alibaba's stock has surged 73% since its low in mid-January (as of this writing). JD and Tencent have also been firmly in rally mode, with the stocks up 41% and 30%, respectively, during the same timeframe. Recent developments suggest there could be more to come.

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Chinese tech giants Tencent, Alibaba, and ByteDance have ramped up orders for Nvidia's H20 AI chips, driven by the rising adoption of DeepSeek's cost-efficient AI models, reinforcing Nvidia's dominance in China despite U.

Nvidia's H20 chip gains traction in China amid AI demand surge, with Tencent, Alibaba, ByteDance leading orders. Discover how U.S.

Uncertainty about the impact of new U.S. tariffs weighed on stocks, along with worries about tightening chip export curbs, and competition from China as Alibaba unveiled its latest AI reasoning model, which it said rivals offerings from DeepSeek and ChatGPT maker OpenAI. Alibaba shares climbed about 1%.

Nvidia’s chips are primarily manufactured by TSMC in Taiwan; however, some systems and computers utilizing these chips are produced in other regions, including Mexico.

Shares of Alibaba (BABA) are up 2% in pre-market around $144, following yesterday’s 9% gain in the stock price. Reuters reports that the

Chinese tech giant Alibaba said its latest AI reasoning model, QwQ-32B, “rivals cutting-edge reasoning model, e.g., DeepSeek-R1.”

Shares of Nvidia ( NVDA 4.71%) gained ground on Wednesday, climbing as much as 5.6%. As of 11:37 a.m. ET, the stock was up 4.5%. The catalyst that sent the artificial intelligence (AI) chipmaker higher was a report that suggested demand remained high for the company's processors in an important market.