In an unprecedented market shift, Nvidia experienced the largest single-day loss of market share in U.S. stock market history, shaving nearly $600 billion off its market cap. The sudden decline was driven by the emergence of DeepSeek, a Chinese AI startup that introduced a groundbreaking open-source AI model, posing a significant challenge to Nvidia’s dominance in the AI hardware sector. As of the writing of this article, DeepSeek is the most downloaded free app in the U.S. on Apple’s App Store daily, surpassing ChatGPT in download volume.
Nvidia’s stock plummeted by 17% as investors reacted to fears that DeepSeek’s cost-effective AI technology could reduce the reliance on Nvidia’s high-end GPUs. Market analysts warned that this disruption could reshape the AI industry, possibly prompting companies to switch to alternative, more affordable solutions.
Despite the market’s huge turmoil, Nvidia appeared unfazed, referring to DeepSeek’s R1 model as “an excellent AI advancement” in a statement on Monday, January 27th.
Following the dramatic selloff, Nvidia’s stock rebounded nearly 9% the next day, signaling investors’ optimism about the company’s resilience. As AI technology continues to evolve, the market will be watching closely as to how Nvidia adapts to such a shifting competitive landscape.
Sources:
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Reid, J. and Harring, A. (2025). Nvidia drops nearly 17% as China’s cheaper AI model DeepSeek sparks global tech sell-off. [online] CNBC. Available at: https://www.cnbc.com/2025/01/27/nvidia-falls-10percent-in-premarket-trading-as-chinas-deepseek-triggers-global-tech-sell-off.html [Accessed 6 Feb. 2025].
Huang, R., Woo, S. and Fitch, A. (2025). Everyone’s Rattled by the Rise of DeepSeek—Except Nvidia, Which Enabled It. [online] WSJ. Available at: https://www.wsj.com/tech/ai/nvidia-jensen-huang-ai-china-deepseek-51217c40 [Accessed 6 Feb. 2025].
Stankiewicz, K. (2025). Here’s what Jim Cramer tells investors to do with Nvidia as shares tumble on DeepSeek AI fears. [online] CNBC. Available at: https://www.cnbc.com/2025/01/27/jim-cramer-gives-advice-on-what-to-do-with-nvidia-as-shares-tumble-on-deepseek-ai-fears.html [Accessed 6 Feb. 2025].
Bratton, L. (2025). Nvidia stock begins recovery after DeepSeek AI frenzy prompted near $600 billion loss. [online] Yahoo Finance. Available at: https://finance.yahoo.com/news/nvidia-stock-begins-recovery-after-deepseek-ai-frenzy-prompted-near-600-billion-loss-134240328.html [Accessed 6 Feb. 2025].
