On Monday, NVIDIA lost nearly $600 billion in market capitalization—the largest single-day loss for any company in U.S. history. The chipmaker’s stock dropped 17%, closing at $118.58, marking its worst market day since the early days of the Covid-19 pandemic in March 2020.
The dramatic sell-off was fueled by mounting competition in the artificial intelligence (AI) sector. Chinese AI lab DeepSeek unveiled a free, open-source large language model built in just two months with reduced-capability Nvidia H800 chips, costing less than $6 million. This development raised concerns about a potential shift in the AI landscape, with increased competition threatening NVIDIA’s dominance.
NVIDIA’s GPUs have been the cornerstone of AI advancements in the U.S., with major tech players like Alphabet, Meta, and Amazon heavily investing in these processors to power their AI models. However, DeepSeek’s achievement has sparked fears of reduced spending on NVIDIA’s high-performance GPUs.
Analysts at Cantor highlighted the anxiety within the market, stating that DeepSeek’s advancements could signal a peak in demand for NVIDIA’s chips, further shaking investor confidence.
Adding to the turmoil, NVIDIA’s drop triggered a broader sell-off in tech stocks, contributing to a 3.1% decline in the Nasdaq index.
Despite the setback, NVIDIA remains a leader in AI and chip technology. However, this historic loss serves as a stark reminder of the volatility and intense competition in the rapidly evolving AI industry. The road ahead will require strategic resilience to regain investor trust and market stability.
