Nvidia Plunges on DeepSeek AI Concerns, Eclipsing Market Value Loss Record
Amid investor concerns sparked by Chinese AI startup DeepSeek, Nvidia Corp.'s stock plummeted, obliterating an unprecedented $465 billion in market capitalization. This eclipses the previous record of a 9% drop in September that erased $279 billion in value.
Nvidia shares tumbled 13% at market open on Monday, reflecting the significant impact of DeepSeek's low-cost AI model on the market. The selloff extended to the broader tech sector, with the S&P 500 and Nasdaq 100 declining by 2.3% and 3.6%, respectively.
DeepSeek's latest AI model, released last week, showcases comparable performance to Western chatbots at a fraction of the cost, raising concerns about the overinvestment by US companies in AI development.
Nvidia has been a major beneficiary of this AI spending surge, designing semiconductors for the technology. However, heightened investor scrutiny may hamper companies that continue to invest without demonstrating sufficient return.
Meta's recent announcement of a substantial increase in AI project capital expenditures has highlighted the competitive landscape, while DeepSeek's progress suggests that Chinese AI engineers are overcoming export restrictions through increased efficiency.
Despite US efforts to hinder China's AI advancements, DeepSeek's success may indicate that Chinese engineers have found ways to circumvent these measures.