Recent days have rocked the financial markets with devastating news about Nvidia’s record-breaking collapse in market value. In just one day, the company lost a whopping $384 billion, which became a downturn that coincided with the growing popularity of the Chinese AI startup DeepSeek. The startup’s AI chatbot application has bypassed ChatGPT in the Apple App Store, triggering widespread investor panic.
DeepSeek’s breakthrough stems from its ability to offer an AI chatbot comparable in performance to ChatGPT while being free for users and considerably cheaper for the developers. This event sparked panic among Nvidia shareholders and drew the attention of the authorities. Unlike Nvidia’s high-powered chips, which are prohibited for shipments to China, DeepSeek has managed to achieve impressive AI performance with less powerful alternatives and relatively low costs for training an AI model. This raised serious questions about the effectiveness of Washington’s technology export policies.
Nvidia’s loss set off a chain reaction, and other companies related to AI took a hit. Broadcom shares plummeted by 17.3%, AMD by 8%, Palantir by 7%, and Microsoft stock fell by 3%. Even OpenAI which is not publicly traded, would most likely have been among the fall leaders.
Monday, January 27, 2025, will go down as a black day for the technology sector companies. Nvidia alone saw its capitalization shrink by about $600 billion — the largest single-day loss in US stock market history. And there are fears that the worst may not be over yet.
DeepSeek drew the attention of such high-profile players as Donald Trump and Sam Altman.
Both leaders praised DeepSeek’s successes, predicting that improving AI technologies will be a key factor contributing to the US position on the global stage. However, the rapid development of Chinese technology raises concerns about the continued competitiveness of American firms, and Nvidia has been at the center of these fears. The Nasdaq Composite index lost 3%, while the S&P 500 index slid 1.5%.
The collapse of Nvidia’s shares has affected other markets, including cryptocurrency. Bitcoin has been below the $98k mark for some time due to shifts in the stock market and the intensification of post-racial panic among investors trying to evaluate their portfolios by changing their strategies in the face of growing uncertainty. The cryptocurrency market has come under pressure due to the decline in the value of AI technology companies’ securities, as their dominant position has come into question.
Against this background, Coinbase and MicroStrategy shares fell by 6% and 5%, respectively. Companies that mine cryptocurrencies and invest in AI also suffered sharp declines, with Core Scientific Inc. losing 18.5% in price, Terawulf 14%, and Iren (formerly Iris Energy) 10%.
Nvidia’s historic $384 billion plunge in market value in just a day illustrates how volatile the high-tech sector can be. The emergence of competitive startups like DeepSeek can radically change the game’s rules, forcing established tech giants to rethink their strategies and adapt to new conditions or risk losing their market dominance. As the dust settles, one question remains—will Nvidia and other U.S. tech giants recover, or has DeepSeek permanently altered the AI landscape? The coming months will be crucial in determining the next chapter in this unfolding saga.
