Nvidia Loses Nearly $600 Billion in Single Largest Market Drop Ever as DeepSeek AI Disrupts Industry

Artificial Intelligence Business Finance & Crypto Technology

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In a jaw-dropping turn of events, Nvidia (the world’s 2nd most valuable company) took a massive and historic hit to it’s market value, shedding nearly $600 billion in a single day—the largest one-day loss in U.S. history.

What Happened?

The culprit? A Chinese AI startup named DeepSeek, which has burst onto the scene with an AI model that’s both cost-effective and efficient, sending shockwaves through the tech industry.

DeepSeek’s latest model, R1, rivals the performance of leading AI systems like OpenAI’s ChatGPT but was developed at a fraction of the cost—just $6 million compared to the over $100 million spent on GPT-4. Even more impressively, it was trained using significantly fewer resources, utilizing about 2,000 Nvidia H800 GPUs over 55 days.

Why Did Nvidia’s Stock Crash?

This breakthrough has investors rethinking the future of AI hardware investments. The fear is that more efficient AI models like DeepSeek’s could reduce the demand for high-end chips and massive data centers, which have been the backbone of AI development.

As a result, tech stocks took a hit, with Nvidia experiencing the most significant decline.

Nvidia Responds

Nvidia acknowledged DeepSeek’s advancements, stating that it exemplifies “Test Time Scaling” and highlights how new models can be created using widely available compute resources. They emphasized that while training may become more efficient, inference—running these AI models—still requires substantial GPU power and high-performance networking.

AI’s “Sputnik Moment”

This development has been dubbed AI’s “Sputnik moment,” signaling a potential shift in the global AI landscape. It challenges the notion that only tech giants with deep pockets can lead in AI innovation and raises questions about the future dynamics of the tech industry.

Nvidia’s Market Cap: Before and After

Before this upheaval, Nvidia’s market capitalization stood at approximately $3.5 trillion.
Following the DeepSeek announcement, it plummeted to around $2.9 trillion, placing it behind Microsoft ($3.2 trillion) but still ahead of Amazon ($2.5 trillion).

In the days since, Nvidia’s stock has shown signs of recovery, with its market cap rebounding to about $3.1 trillion as of today.

Billionaires’ Net Worth Impact

The recent market upheaval not only impacted companies but also significantly affected the net worth of several tech billionaires. Collectively, tech moguls lost almost $100 billion due to the stock market selloff triggered by DeepSeek’s emergence.

Jensen Huang, CEO of Nvidia, experienced a substantial personal loss. As Nvidia’s market value plummeted by $600 billion, Huang’s net worth decreased by nearly $21 billion.

Larry Ellison, the co-founder and chairman of Oracle, also saw a significant drop in wealth, losing around $10 billion due to the stock market turmoil. Oracle’s stock was impacted due to concerns over AI infrastructure spending adjustments.

Other tech leaders, including those at companies like Microsoft and Google, also saw declines in their net worths as their companies’ stock prices were affected by the market’s reaction to DeepSeek’s advancements.

This significant shift underscores the profound impact that technological innovations can have on the financial standings of industry leaders.

What’s Next?

As the dust settles, the tech world is left to ponder: Is this the beginning of a new era where nimble startups can outmaneuver established giants?

One thing’s for sure—DeepSeek has made a grand entrance, and the AI game may never be the same.

Sources:

• Biggest Market Loss in History: Nvidia Stock Sheds Nearly $600 Billion as DeepSeek Shakes AI Darling
• Nvidia Loses $589 Billion in Market Cap: Broad Stock Plunge Triggered by DeepSeek AI Release
• Tech Billionaires Lost Almost $100bn in Stock Market Selloff Sparked by DeepSeek
• Why Everyone is Freaking Out About DeepSeek
• Nvidia Stock Slashes Nearly $600 Billion in Market Value. What’s Driving the Panic and Why It May Be Overblown.