DeepSeek AI Revolution Shook Nvidia and Sent a $593 Billion Shockwave Through Global Markets

While Nvidia, led by Jensen Huang, bore the brunt of this disruption, the impact rippled across the market. The S&P 500 fell, and the Nasdaq dropped over 3%. Investors grew uneasy as reports highlighted the cost-effectiveness of DeepSeek open-source AI, made at a fraction of the price compared to U.S. alternatives. Concerns about America’s expensive investments in AI technology versus this Chinese innovation dragged down market confidence.

DeepSeek AI, a low-cost Chinese AI start-up from Hangzhou, has shaken global stock markets and U.S. tech giants. The company’s rise triggered a massive $593 billion loss for chipmaker Nvidia overnight—a staggering 17% drop, marking the largest single-day market cap loss in Wall Street history, according to LSEG data.

Tech Stocks’ Response: Nvidia, Broadcom, Microsoft, and Google Take a Hit

On January 27, the US tech-heavy Nasdaq fell by 3.1%, largely driven by Nvidia’s 17% drop, a record single-day loss. Broadcom followed with a 17.4% decline, Microsoft, the backer of ChatGPT, dropped 2.1%, and Google’s parent, Alphabet, slipped 4.2%, according to Reuters.

The Philadelphia semiconductor index also dropped 9.2%, marking its steepest decline since March 2020. Marvell Technology suffered the largest loss on the Nasdaq, falling 19.1%.

The US decline followed a selloff that started in Asia, with Japan’s SoftBank Group losing 8.3%. The downturn spread to Europe, where ASML fell 7%.

Other notable losses included Vertiv Holdings, which dropped 29.9%, Vistra falling 28.3%, Constellation Energy down 20.8%, and NRG Energy losing 13.2%. Power companies, in particular, faced sell-offs, as many investors had recently piled in, expecting a surge in demand from power-hungry data centers needed for AI.

What Did ChatGPT’s Rival Sam Altman Say About DeepSeek?

OpenAI founder Sam Altman responded to DeepSeek’s rapid rise, calling it “invigorating” to face new competition. He also hinted at upcoming releases from OpenAI to counter DeepSeek’s R1 reasoning model. On X, Altman posted, “DeepSeek’s R1 is an impressive model, especially for what they deliver at that price. We will obviously deliver much better models, and it’s legit invigorating to have a new competitor! We will pull up some releases.”

Altman continued, “But mostly, we’re excited to stick to our research roadmap. We believe more compute is crucial now to succeed in our mission. The world will want to use a lot of AI and be amazed by the next-gen models coming.”