On 27 January 2025, one trading session saw Nvidia Corporation wipe off about US$600 billion, the largest one-day loss ever by any company in US history. Shares plunged about 17% to close at $118.58. The plunge marked the biggest one-day market decline of the semiconductor firm since 16 March 2020, when the COVID-19 pandemic was heating up.
This can mainly be attributed to reasons arising from the arrival of DeepSeek, a Chinese AI startup.
Later this month, DeepSeek came out with R1-an open-source and free large language model-with powers as good as any other state-of-the-art AI in the market today, but touted to be capable of building for a fraction of what conventional developer requirements stand at. Most interestingly, DeepSeek reportedly did this with less efficient chips from Nvidia-called H800s-and thus not needing more advanced and more expensive hardware.
Fast-improving DeepSeeker has raised questions as to whether there is still going to be major demand in the marketplace for this type of high-end GPU that, until now, Nvidia had dominated. Analysts at Cantor said this revelation of DeepSeek’s newest technology created “great angst as to the impact for compute demand, and therefore, fears of peak spending on GPUs.” Yet they remained sanguine, it would likely result in the AI industry wanting more computers, not less.
Extensive market impact
Its fall was immediately felt, especially in technology sectors whose fate is hitched in one way or another to AI.
Shares of Broadcom, another major US chipmaker that has similarly benefited from the recent boom in AI, were down 17% to cut off about US$200 billion in market capitalization. Data center companies that were hooked on the sale of GPU hardware from Nvidia struggled in heavy losses: Dell Technologies, Hewlett Packard Enterprise, and Super Micro Computer each lost at least 5.8%. Oracle Corporation, fresh into the limelight after involvement in recent AI efforts, slid 14% as well.
Comparisons and historic context
This surpasses the largest one-day market value loss of $279 billion, endured by Nvidia in September 2024, more than twice over. This had topped Meta’s $232 billion in 2022. If anything, the recent plunge in Nvidia far outstrips the entire market capitalization of companies like Oracle and Netflix.
Losses at CEO’s personal level
This loss resulted in the instant plummet of its stock and hit Nvidia ‘s CEO Jensens Huang–pegged by Forbes’ Real-Time Billionaires ranking–about US$21 billion in loss, hence tumbled himself to the position of 17 in rankings of World Richest.
DeepSeek shake-ups market
DeepSeek’s success sent a shockwave that unsettled not only Nvidia but a wider technology world. DeepSeek pushed OpenAI’s ChatGPT aside to be the most-downloaded free app last weekend in the US, according to Apple Inc.’s App Store. And with that meteoric rise, investors point at not just their rising star but perhaps one conjoining challenge facing market leaders in AI.
Antically uncomplicated technology stopped short of capsizing the market leader but managed to ruffle its feathers nonetheless.
Not to say that – against the immediate market reaction – some analysts would caution against overestimating how much in recent developments DeepSeek would hurt, in the longer term.
Geopolitical considerations
The rapid rise of DeepSeek parallels an escalation in rivalry between the United States and China over their visions for leadership in artificial intelligence. That such a startup company, at a disadvantage regarding state-of-the-art hardware, can create a competitive AI model bucks the usual assumptions-truly sophisticated AI must run on similarly sophisticated, more costly chips, which also means larger implications for worldwide tech supply chains and the strategic position of technology-leading countries.
