Nvidia Stock Plummets Amid Rise of Chinese AI App DeepSeek

Nvidia Shares Surge After Three-Day Slump, Recovering $430 Billion in Market Value

Key Points

  • Nvidia shares plunged over 16% following the launch of Chinese AI app DeepSeek.
  • DeepSeek uses the low-cost, open-source DeepSeek-V3 model, trained on a $6 million budget.
  • Other chipmakers like Broadcom and AMD also faced sharp declines.
  • Historical data shows Nvidia often recovers within 15 days after significant drops. The selloff highlights growing global competition in AI innovation.

Nvidia Corporation (NASDAQ:NVDA) experienced a dramatic market downturn yesterday, with shares tumbling over 16% following the unexpected success of DeepSeek, a Chinese artificial intelligence (AI) app. The selloff wiped out significant value for the tech giant and raised fresh concerns about the future of U.S. dominance in the AI sector. Today, the stock saw a gain of 2.42% or 2.87 at pre-market trading, reaching 121.45.

DeepSeek, an AI chatbot powered by the open-source DeepSeek-V3 model, has disrupted the market with its cost-efficient development process. According to company researchers, the model was trained with an estimated budget of $6 million—far less than the billions spent by its competitors. Since its launch last week, DeepSeek has become the most downloaded free app in the United States, sparking fears of intensified competition from China.

Nvidia was not the only casualty. Other AI-focused chipmakers, such as Broadcom Inc. (NASDAQ:AVGO) and Advanced Micro Devices Inc. (NASDAQ:AMD), also saw their stock values decline sharply. DeepSeek’s sudden success has raised questions about the sustainability of U.S. firms’ massive investments in AI infrastructure.

Last week, OpenAI and other leading tech companies committed to investing $500 billion in U.S.-based AI infrastructure. However, DeepSeek’s rapid rise suggests that innovation and cost efficiency, rather than sheer investment size, could shape the future AI landscape.

Despite the sharp decline, historical data indicates Nvidia’s stock tends to recover in the medium term after major single-day drops. Since 2022, the stock has fallen by at least 9% in seven instances. In five out of six cases, Nvidia outperformed the S&P 500 (SPY) within 15 days, often posting double-digit percentage gains. However, short-term volatility remains a risk, with mixed results observed in the first five trading days.

The selloff reminds us of the volatile nature of the tech sector, particularly as global competition intensifies in AI innovation. Investors are now watching Nvidia’s next steps and the broader market’s reaction to DeepSeek’s meteoric rise.

EDITORIAL TEAM
EDITORIAL TEAM
TechGolly editorial team led by Al Mahmud Al Mamun. He worked as an Editor-in-Chief at a world-leading professional research Magazine. Rasel Hossain and Enamul Kabir are supporting as Managing Editor. Our team is intercorporate with technologists, researchers, and technology writers. We have substantial knowledge and background in Information Technology (IT), Artificial Intelligence (AI), and Embedded Technology.

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