Nvidia Loses $600 Billion in Market Value as DeepSeek AI Disrupts Industry
Nvidia has suffered the largest single-day market value loss in U.S. history, shedding nearly $600 billion amid fears that a new open-source AI model from Chinese startup DeepSeek could disrupt the industry.
The company’s stock plunged 17%, closing at $118.58, marking its worst trading day since March 2020. Nvidia’s market capitalization dropped from $3.5 trillion to $2.9 trillion, pushing it below Apple and Microsoft in valuation.
The market turmoil was triggered by DeepSeek’s release of R1, an open-source large language model (LLM) that has rapidly gained traction, becoming the top app on the U.S. Apple App Store. DeepSeek claims it trained the model using 671 billion parameters with just 2,048 Nvidia H800 GPUs and a budget of $5.6 million – a fraction of the billions spent by AI giants like Alphabet, Meta, and Amazon.
Industry experts say DeepSeek’s AI is on par with leading models, raising concerns that competitors may no longer need to invest heavily in Nvidia’s high-end GPUs to develop powerful AI tools. This fear led to a broader market sell-off, with tech firms Arm, Broadcom, and Oracle all experiencing at least a 10% decline. Reports suggest total losses across U.S. and European tech companies could exceed $1 trillion.
Notable Silicon Valley figures, including Marc Andreessen and OpenAI CEO Sam Altman, have praised DeepSeek’s breakthrough. Altman described the model as “impressive” but assured that OpenAI would continue to lead innovation.
This historic loss surpasses Nvidia’s previous record $279 billion decline in September 2024, which stemmed from weak manufacturing sector data. The drop has also impacted Nvidia CEO Jensen Huang, whose net worth fell by $21 billion, reducing his fortune to $103.1 billion.