In one of the biggest surprises of the stock market year already, Nvidia (NVDA) has plummeted more than 12% in the last 24 hours as Chinese AI startup DeepSeek has all of Wall Street panicking. Indeed, the AI chipmaker has stumbled alongside some of the biggest names in the tech sector.
There is a widespread fear that DeepSeek could challenge the United States’ dominance within the emerging industry. The capabilities of the new free, open-source, large language model have made waves since its December launch. Now, the tech sector is feeling the pressure through the stock market.
JUST IN: Nvidia $NVDA shares fall 13%, erasing $500 billion in market value.
— Watcher.Guru (@WatcherGuru) January 27, 2025
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DeepSeek Makes Waves: AI Startup Drives Nvidia, Microsoft, META, and More Down
Less than five days ago, Nvidia officially surpassed Apple (AAPL) to become the largest company in the world by market cap. That was no small feat and was driven by the recent US government policy shifts toward the AI sector. Moreover, it increased optimism that the AI chipmaker could be the first company to reach a $4 trillion value.
Yet, a lot of those thoughts have shifted mightily Monday. Indeed, Nvidia (NVDA) stock has fallen more than 12% over the last 24 hours as the emergence of DeepSeek has all of Wall Street concerned. Its presence has thrown a wrench in plans just a week after US President Donald Trump said the country would be the “world capital” in AI.
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The DeepSeek application was reportedly developed in just two months, according to the New York Post. Moreover, that development took place for less than $6 million. That is perhaps the most important difference, as the United States has put billions into the technology. Microsoft (MSFT) itself invested $13 billion into ChatGPT developer OpenAI.
The emergence led to a global sell-off that heavily impacted semiconductor firms. Additionally, it has many ponder if the United States will be able to maintain its strength in the sector. Microsoft had plummeted 4.1% in premarket trading after its AI investment was called the “best money ever spent.”