New AI Model From Chinese Startup, DeepSeek, Hammers Nvidia Stock

What to Know

After DeepSeek released a powerful new AI model, Nvidia experienced not only its biggest single-day stock decline, but the biggest period. Over half a trillion dollars in value was wiped out in a single day.

Key Takeaway

• The Chinese AI startup's DeepSeek-R1 model appears to rival the capabilities of U.S. giants like OpenAI and Google, but with with significantly less powerful hardware. Investors are grappling with the implication that future AI models could be developed with greater efficiency, potentially reducing the demand for Nvidia's powerful GPUs and forcing a reevaluation of the massive investments made by tech giants in AI hardware.

The sell-off extended beyond Nvidia, impacting other AI-related stocks and the broader tech sector, though it remains to be seen whether this downturn sticks, or whether the news simply triggered a reactionary response.