A new development in the AI space has sent shockwaves through Wall Street, as Chinese AI company DeepSeek’s recent moves caused NVIDIA, the dominant player in AI tech, to see its stock plummet by nearly 17%.
On Tuesday, NVIDIA’s stock plunged 16.97%, closing at $118.42. The sharp decline wiped out over $589 billion in market value, dropping the company’s market cap below the $3 trillion mark for the first time in recent history. As a result, NVIDIA’s market value now stands at $2.903 trillion, making it the third-largest U.S. company by market capitalization.
This marks the largest single-day loss in U.S. stock market history, surpassing NVIDIA’s previous record. In September 2024, the company lost around $279 billion in a single day. However, Tuesday’s loss nearly doubled that amount, highlighting the mounting concerns over its future growth prospects.
With the drop, NVIDIA’s market cap ranking fell to third place, with Apple ($3.458 trillion) and Microsoft ($3.230 trillion) now ahead of the company in the market cap standings.
On January 20, DeepSeek, a Chinese AI company, launched a new AI model that could challenge OpenAI’s dominance in the space. Marc Andreessen, a prominent U.S. venture capitalist, hailed the development as “one of the most amazing and impressive breakthroughs I’ve ever seen.”
Even more striking is that DeepSeek spent only $5.576 million developing its chatbot—just a fraction of the $100 million OpenAI poured into its latest version. This stark difference in investment has raised concerns that companies like NVIDIA, which is heavily invested in AI, may be overvalued, given the emerging competition.
These concerns have led to predictions that NVIDIA could soon face revenue challenges. As a result, the company’s stock suffered a sharp 17% drop, sparking a broader sell-off in semiconductor stocks. By the close of trading, the Nasdaq had fallen more than 3%, reflecting the wider impact of the news.