Nvidia Suffers Historic $520 Billion Blow: DeepSeek’s AI Breakthrough Rattles the Market
Key Points
- Nvidia’s stock nosedived by 15%, erasing $520 billion in market value.
- DeepSeek’s low-cost AI rival questions Nvidia’s dominance in generative AI.
- CEO Jensen Huang’s net worth drops by $17 billion.
Nvidia Faces Unprecedented Losses, DeepSeek Emerges as Threat
Nvidia Corporation, the frontrunner in the AI revolution, experienced an unparalleled market downturn on Monday, witnessing a 15% drop in its stock price by 11:15 a.m. EST. This marked Nvidia’s steepest daily decline since the pandemic-driven crash in March 2020. The staggering loss in market capitalization exceeded $520 billion, the largest single-day wipeout in corporate history.
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A Record-Breaking Loss
Nvidia’s $520 billion market value drop surpassed all prior records, overshadowing its own $279 billion loss on September 3, 2024, and Meta’s $251 billion decline in February 2022. The tech giant’s valuation plunged from $3.5 trillion to $2.98 trillion, dethroning it as the world’s most valuable company, a title now held by Apple and Microsoft.
| Biggest Market Losses in History | Date | Value Lost |
|---|---|---|
| Nvidia | January 27, 2025 | $520 billion |
| Nvidia | September 3, 2024 | $279 billion |
| Meta | February 3, 2022 | $251 billion |
Why Nvidia Stock Fell
The dramatic downturn stems from a challenge by DeepSeek, a Chinese AI firm unveiling a groundbreaking large-language model developed at a fraction of the cost of U.S. peers. While Nvidia’s GPUs powered DeepSeek’s technology, the Chinese company reported spending only $5.6 million on the development.
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This revelation challenges the assumption underpinning Nvidia’s meteoric rise: the high demand for its GPUs, priced at up to $25,000 each. If major U.S. tech companies such as Meta, Tesla, and OpenAI adapt DeepSeek’s cost-efficient strategies, Nvidia’s dominance in the AI hardware market could face significant disruption.
Market-Wide Impact
Nvidia’s plunge triggered a ripple effect across the U.S. stock market, with the S&P 500 falling 1.7% and the Nasdaq dropping 2.9%. Other AI and tech giants, including Arm, Broadcom, and Oracle, also saw significant declines, shedding over 9% of their value.
CEO Jensen Huang’s Financial Hit
Nvidia’s historic loss impacted its CEO and largest shareholder, Jensen Huang, whose net worth fell by $17 billion in a single day. Huang, who owns a 3% stake in Nvidia, saw his fortune drop from $124.4 billion to $107.5 billion, according to Forbes estimates.
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The Future of Nvidia in AI
As DeepSeek’s low-cost AI innovations challenge Nvidia’s growth narrative, the tech giant faces pressure to adapt. Analysts caution that U.S. tech leaders may pivot towards cheaper alternatives, potentially reshaping the global AI hardware market.
