On Monday, Nvidia suffered the largest single-day market cap loss in U.S. history, shedding $600 billion in value as its stock plunged 17% to close at $118.58. The sharp decline was fueled by investor concerns over rising AI competition, particularly from China’s DeepSeek, which has introduced a cost-effective alternative to Nvidia’s high-end GPUs. The sell-off also triggered a broader market downturn, with the Nasdaq falling 3.1% and other AI-related tech stocks, including Broadcom and Oracle, experiencing significant losses.
The creation of DeepSeek has created market uncertainties regarding future AI chip market trends. It operates as a Chinese AI research lab. DeepSeek released its open-source large language model through an implementation of the Nvidia H800 chips. The speed and cost-effectiveness of its development raised concerns that alternative AI models could reduce the reliance on Nvidia’s high-end GPUs.
Nvidia has dominated the AI data center chip market for a long time, supplying industry giants such as Alphabet, Meta and Amazon. However, analysts at Cantor expressed confidence that AI advancements will ultimately drive more demand for computing power rather than reduce it. Despite this reassurance, Nvidia’s dramatic stock gains in recent years have left investors wary of potential downturns. In 2023, the stock surged 239%, followed by a 171% rise in 2024.
The sell-off also impacted other tech companies tied to AI and data centers. Broadcom, another major AI chip manufacturer saw its stock drop by 17% erasing $200 billion in market value. Companies like Dell, Hewlett Packard Enterprise and Super Micro Computer, which rely on Nvidia’s GPUs, suffered losses of at least 5.8%. Oracle, a key player in AI infrastructure, fell 14%.
Nvidia’s loss exceeded previous record declines, including its own $279 billion drop in September and Meta’s $232 billion loss in 2022. The decline even surpassed the market cap of major corporations like Coca-Cola and Chevron. CEO Jensen Huang’s net worth also took a hit, dropping by $21 billion.
DeepSeek’s rising popularity was further highlighted as its AI app surpassed OpenAI’s ChatGPT in Apple’s U.S. App Store rankings. The rapid development of alternative AI models has sparked discussions about global AI competition and U.S. policies on technology exports.
Market investors and industry leaders watch AI chip dominance closely because Nvidia stands as the third most valuable publicly traded company after Microsoft and Apple.