In a historic market event, Nvidia Corporation faced its largest single-day loss on Monday, January 27, 2025. The company’s stock plummeted by 13%, wiping out a staggering $465 billion from its market value. This loss is now the biggest one-day drop in U.S. stock market history, surpassing Nvidia’s previous record of a 9% decline in September 2024, which erased $279 billion.
The dramatic fall was triggered by growing investor concerns over DeepSeek, a Chinese artificial intelligence (AI) startup. DeepSeek recently launched an open-source AI model that rivals top-tier models from OpenAI and Meta Platforms Inc. What makes DeepSeek stand out is its cost-efficiency. The model was developed with just $5.6 million, a fraction of the billions spent by U.S. tech giants.
DeepSeek’s AI model, known as DeepSeek-V3, has quickly climbed to the top of Apple’s App Store rankings. It offers performance comparable to leading AI models but uses less powerful chips and requires significantly less data. This has raised fears that the AI industry’s reliance on expensive hardware and massive computing power might be challenged.
Nvidia, a key player in the AI chip market, has been a major beneficiary of the AI boom. However, DeepSeek’s breakthrough has made investors question whether Nvidia’s high-end chips will remain essential. Analysts warn that DeepSeek’s success could disrupt the current AI business model, which depends heavily on advanced semiconductors and energy-intensive data centers.
The impact of Nvidia’s decline was felt across the broader market. The S&P 500 fell by 2.3%, and the Nasdaq 100 dropped 3.6%. Technology stocks, including Microsoft, Meta, and Alphabet, also saw significant losses. Even AI server manufacturers like Dell Technologies and Super Micro Computer were hit hard, with their shares falling by 7.2% and 8.9%, respectively.
Despite the sell-off, some experts remain skeptical about DeepSeek’s long-term impact. Citi analyst Atif Malik noted that DeepSeek’s achievements might still rely on advanced GPUs for fine-tuning its models. However, the market’s reaction highlights the growing uncertainty in the AI sector, especially as China continues to innovate despite U.S. export restrictions on advanced semiconductor technologies.
Nvidia’s record-breaking loss underscores the volatile nature of the AI industry. As DeepSeek gains traction, the race for AI dominance is heating up, and companies like Nvidia may need to adapt quickly to stay ahead. For now, the market remains on edge, watching how this competition unfolds.
