Nvidia Loses Nearly $600 Billion as China’s DeepSeek Disrupts Tech Industry

New York, United States: In a dramatic turn of events that sent shockwaves through the global tech industry, US chipmaker Nvidia experienced a sharp 17% decline in its stock value on Monday. This monumental drop wiped out nearly $600 billion of its market capitalization, as concerns grew over the emergence of a Chinese challenger, DeepSeek, which appears poised to disrupt the fast-evolving AI landscape.

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The DeepSeek Disruption

DeepSeek, a startup based in Hangzhou, China, has quickly risen to prominence with its generative AI chatbot, DeepSeek-R1. The bot has demonstrated capabilities that rival those of leading US AI models—at a fraction of the cost. Astonishingly, the company revealed that its cutting-edge model was developed with a modest investment of just $5.6 million, a stark contrast to the billions of dollars poured into similar projects by US tech giants.

DeepSeek-R1’s rapid success was evident as it topped the US App Store’s free application charts, underscoring its appeal and accessibility. However, its rise has not been without challenges; the company reported “large-scale malicious” cyberattacks on its services, forcing it to restrict new user registrations to Chinese phone numbers.

Impact on US Tech Giants

The rise of DeepSeek has raised critical questions about the future of US dominance in the AI sector. Kathleen Brooks, research director at trading platform XTB, commented, “The focus is now on whether China can do it better, quicker, and more cost-effectively than the US. If they succeed, this could dramatically alter the AI race.”

The shockwaves extended beyond Nvidia, with other semiconductor firms like Broadcom suffering a 17.4% drop in share prices. Dutch chipmaking equipment manufacturer ASML saw a 6.7% decline, while companies like Constellation Energy, which are building energy infrastructure for AI, plummeted by over 20%.

Market Repercussions

The tech-heavy Nasdaq index closed 3.1% lower on Monday, leading a broad selloff in the global equities market. The S&P 500 shed 1.5%, while Europe’s Frankfurt and Paris stock exchanges also ended in the red. Even Asian markets felt the pressure, with Japan’s Nikkei 225 falling 0.9%.

Adding to the turmoil, Trump’s recently announced $500 billion AI infrastructure venture with SoftBank and OpenAI failed to calm markets. SoftBank’s stock dropped over 8% in Tokyo, alongside significant losses for Japanese semiconductor companies.

The Billionaire Blowback

The tech selloff had profound implications for some of the world’s wealthiest individuals. Nvidia CEO Jensen Huang’s net worth fell by $20.1 billion, while Oracle co-founder Larry Ellison lost $22.6 billion. Combined, tech billionaires lost an estimated $94 billion, according to the Bloomberg Billionaires Index. However, not all were affected equally—Meta CEO Mark Zuckerberg’s wealth increased by $4.3 billion as Meta’s stock rebounded later in the session.

DeepSeek’s AI Playbook

A key factor behind DeepSeek’s cost-efficiency is its ability to work around US export controls on high-end GPUs. Reports suggest the company has amassed significant quantities of Nvidia’s H100 chips despite these restrictions. This development calls into question Silicon Valley’s reliance on heavy capital investments and raises concerns about US-China trade policies.

According to Alexandr Wang, CEO of Scale AI, “Chinese labs have more H100s than people think. DeepSeek’s estimated 50,000 H100s allow them to innovate at levels that match or exceed their Western counterparts.”

Outlook and Challenges Ahead

The coming week will be crucial as major US tech players like Meta and Microsoft are set to report their earnings. These reports are expected to address the implications of DeepSeek’s rise and its impact on the global AI landscape.

Meanwhile, economic factors such as interest rate decisions from the US Federal Reserve and European Central Bank, as well as inflation data, will further influence market trends.

The growing influence of DeepSeek has sparked a wake-up call for US policymakers and tech leaders alike. Former President Trump described the situation as “a wake-up call for the US,” signaling the need for renewed focus on maintaining American leadership in the AI race.

Conclusion

As DeepSeek continues to challenge the dominance of Western tech giants, the global tech ecosystem faces a pivotal moment. The rise of a low-cost, high-performing AI model underscores the shifting dynamics of the industry, leaving both investors and policymakers grappling with the future of artificial intelligence.

For now, the world watches as DeepSeek’s disruptive entry reshapes the narrative around AI innovation, cost efficiency, and geopolitical competition in the tech sector.