- Nvidia shares plunged 17% on Monday, wiping out $589 billion in market value.
- The selloff was fueled by concerns over Chinese firm DeepSeek’s low-cost AI model.
- Despite US export bans, DeepSeek’s efficiency-focused AI progress hints at Chinese workarounds.
Nvidia shares suffered a historic 17% drop on Monday, erasing $589 billion in market value, as concerns over AI competition mounted. This marked the largest single-day market cap loss in US history, eclipsing previous records, reports Yahoo Finance.
Nvidia’s Historic Slump
The 17% plunge overshadowed Nvidia’s September drop of 9%, which had erased $279 billion.
This recent selloff also impacted major US indexes, with the S&P 500 falling 1.5% and the Nasdaq 100 dropping nearly 3%.
DeepSeek’s Disruptive AI Model
Chinese firm DeepSeek unveiled a competitive, low-cost AI model last week, sparking fears of disruption to the high-cost AI business model.
Jefferies analysts noted that DeepSeek’s efficiency-focused approach challenges the reliance on expensive chips and energy-intensive computing.
Impact on Nvidia and Broader AI Industry
Nvidia, a key player in the AI sector due to its advanced semiconductors, has been a major beneficiary of heavy AI investments.
However, DeepSeek’s model has raised investor concerns about the return on these investments.
US-China Tech Rivalry and Export Bans
The US has banned exports of advanced semiconductor technologies to China to stall its AI progress.
Despite these restrictions, DeepSeek’s advancements suggest Chinese engineers have adapted by focusing on efficiency with limited resources.
Meta and Other Tech Giants Double Down
Amid these developments, other tech giants continue their AI investments.
Meta announced plans to increase AI capital expenditures to $65 billion, while OpenAI, SoftBank, and Oracle revealed a $100 billion joint venture to expand AI infrastructure.
Nvidia’s Response to DeepSeek
In a statement, Nvidia acknowledged DeepSeek’s AI as an “excellent advancement” and emphasized that running AI models still demands extensive Nvidia GPUs and high-performance networking.
Future Outlook
The emergence of low-cost competitors like DeepSeek underscores the evolving dynamics of the AI market.
They challenge established players like Nvidia while highlighting the growing role of efficiency in driving AI innovation.
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Source: Yahoo Finance
