Nvidia Stock Plummets as DeepSeek Ignites AI Stock Selloff
Nvidia’s stock experienced a dramatic decline on Monday, erasing nearly $593 billion in market value as investors reacted to the launch of a competitive AI model from Chinese startup DeepSeek. This unforeseen development raised concerns over the sustainability of Nvidia’s dominance in the AI sector, driving the Nasdaq down 3.1% for the day, with Nvidia being the primary contributor to this downturn. The company’s shares fell almost 17%, marking one of the largest single-day market cap losses on Wall Street.
DeepSeek introduced a cost-effective AI assistant that rapidly gained traction, surpassing ChatGPT in downloads from Apple’s app store by Monday. This shift prompted fears about diminishing demand for AI chips, compelling investors to reassess their positions in tech stocks. Notable declines were also observed in other technology firms, with Broadcom dropping 17.4%, Microsoft down 2.1%, and Alphabet down 4.2%.
The Philadelphia semiconductor index saw its biggest percentage drop since March 2020, falling by 9.2%. Concerns regarding the implications of DeepSeek’s innovation reverberated throughout the market, as analysts speculated that it could reshape the AI narrative that has driven stock prices for the past two years.
Marc Andreessen, a prominent Silicon Valley venture capitalist, described DeepSeek’s R1 model as AI’s “Sputnik moment,” emphasizing the profound implications this could have on the industry. However, some experts like Daniel Morgan view the selloff as an overreaction, suggesting it represents a buying opportunity for high-quality tech stocks.
After Monday’s selloff, Nvidia’s shares ended at $118.42, translating to an 11.8% decline for the year. Despite this downturn, the stock has risen significantly over the past two years, reflecting a strong investor belief in Nvidia’s position in the evolving AI landscape.
