DeepSeek revolutionary low-cost AI model shakes the global tech industry, causing NVIDIA to lose $593 billion in market value, marking a historic stock market crash.
DeepSeek’s revolutionary low-cost AI model shakes the global tech industry, causing NVIDIA to lose $593 billion in market value, marking a historic stock market crash.
The global tech industry is in turmoil due to the rise of low-cost artificial intelligence (AI) models developed in China. This development has also caused a significant decline in the stock market for this sector. Notably, the market value of NVIDIA, a leading AI chip manufacturer in the United States and globally, has plummeted by nearly $593 billion, marking the largest single-day loss for any company in Wall Street history.
Reuters reported this information on Tuesday (January 28).According to the report, Chinese startup DeepSeek unveiled a free AI assistant last week, which is believed to be more efficient than conventional AI services while requiring less data and cost. This AI assistant has quickly gained popularity, surpassing its U.S. competitor ChatGPT in downloads from the Apple App Store as of Monday (January 27).
The emergence of this new AI model from China poses a significant challenge to current leaders in the AI industry, creating panic among investors. This has led to an intensified trend of share sell-offs in the tech sector.The impact of DeepSeek has caused a significant slump in the global tech stock market. In this scenario, NVIDIA’s market value has dropped by approximately $593 billion, setting a record for the largest single-day loss in Wall Street history.
An NVIDIA spokesperson described DeepSeek’s model as an “excellent AI advancement.”Even U.S. President Donald Trump commented on the matter, stating, “The storm caused by China’s AI model DeepSeek will wake up our industry leaders. We must focus intensively to win the competition.”However, Trump also noted the positive aspect of this development, saying that the uproar created by DeepSeek could be beneficial, as it will push U.S. companies to bring innovative technologies at lower costs.On Monday, the collapse in the AI technology sector caused the tech-heavy Nasdaq index to drop by 3.1%.
NVIDIA had the biggest impact on Nasdaq, with its stock price falling nearly 17%, setting a record for market value loss in a single day on Wall Street. According to data from the London Stock Exchange Group (LSEG), NVIDIA’s market value loss on Monday was more than double the previous record.Broadcom Incorporated, another chip manufacturer, experienced the second-largest impact on Nasdaq, with its stock price declining by 17.4%.
Following that were ChatGPT’s partner Microsoft, which saw a 2.1% drop, and Alphabet, Google’s parent company, with a 4.2% decrease in share value.Analysts say the popularity of DeepSeek’s new low-cost AI assistant and its impact have created significant instability in the tech sector. This has increased uncertainty among investors, further intensifying the downward trend of the Nasdaq index.The fall in the U.S. market is part of a broader trend of stock sell-offs that began in Asia. Japan’s SoftBank Group fell by 8.3%, while Europe’s markets were also affected. Dutch chipmaker ASML lost 7% of its share value.
Brian Jacobsen, chief economist at Annex Wealth Management, commented, “If DeepSeek truly represents a ‘trap of advanced methods,’ it could completely transform the AI-centric market dynamics of the past two years. Investors worldwide are evaluating the potential impact of the new AI model, which could have long-term implications for the AI industry and its market.”The low-cost AI model from Chinese startup DeepSeek could significantly affect the tech sector, signaling reduced demand for chips, power generation, and large data center construction.
