The semiconductor manufacturer’s share price collapsed as a result of the good results of the Chinese artificial intelligence application DeepSeek, which is undermining American supremacy over AI. Investors are now questioning the long-term competitiveness of U.S. tech firms, as China’s rapid advancements in AI technology continue to disrupt the global market. This development has sparked concerns over the potential shift in technological leadership, prompting calls for increased investment and innovation within the American AI sector to regain its edge.
NVIDIA’s stock has plummeted, wiping out around $589 billion in market value, following the emergence of DeepSeek, a Chinese company that developed a cutting-edge AI model with significantly lower hardware costs. This development has sent shockwaves through global markets, leading to a 3.1% drop in the Nasdaq, with NVIDIA being the hardest hit, experiencing a record 17% one-day loss. As of January 28, 2025, the implications of DeepSeek’s AI disruption on the tech industry and AI landscape are still unfolding.
How the Chinese start-up DeepSeek is shaking up he artificial intelligence sector
In the markets, discussions arose about a potential “Sputnik moment” in artificial intelligence. The release of results from the Chinese application DeepSeek—both more affordable and equally effective as its American counterparts—triggered the bursting of the artificial intelligence bubble that had propelled the Nasdaq for two years. This development cast doubt on American dominance, echoing the moment when the Soviets stunned the United States by launching the first satellite into space.
On Monday, January 27, the tech-focused Nasdaq index closed with a 3.07% decline. Semiconductor manufacturers were among the hardest hit, as their chips appeared to be perceived as less critical.
Nvidia, Broadcom, and Taiwan Semiconductor experienced significant declines, losing between 13% and 17%. In just a few hours, Nvidia, the world’s largest semiconductor company by market capitalization, which was valued at $3.5 trillion (€3.354 billion) on Friday, saw its value plummet by approximately $590 billion in a single day—equivalent to the combined market worth of LVMH, TotalEnergies, and BNP Paribas. This marks the largest single-day drop in history. Interestingly, Intel, despite its diminished technological standing, managed to withstand the downturn as its lower-performing chips found renewed relevance.
The digital giants have experienced significant fluctuations as they engage in a race of (over)investment. Oracle, which made headlines by announcing a $100 billion artificial intelligence initiative, Stargate, at the White House, saw its shares drop by 13.6%. Meanwhile, Microsoft and Google faced more modest declines of 2.1% and 4.2%, respectively, as the market speculated whether their refined approach to artificial intelligence could enable them to achieve more with fewer resources, potentially curbing exorbitant investments. Notably, Meta and Amazon managed to close in positive territory.
Much like Intel, Apple, which has been criticized for missing the AI revolution, was in the green, up 3.2%. Markets will see more clearly during the week, when these companies publish their quarterly results, starting on Wednesday.
Market concerns revived
This correction comes as Wall Street has set records against a backdrop of exuberance on artificial intelligence and Donald Trump’s promises of deregulation and tax cuts. Donald Trump’s threats of tariffs on Colombia on Sunday have revived market concerns.
However, this is not a generalized crash. Investors are reorienting themselves towards the old economy, embodied in particular by the Dow Jones index. It ended up 0.65%, with traditional consumer companies such as Johnson & Johnson, Nike and Procter & Gamble in the green. AT&T, the moribund telecoms giant, gained 6.25%, pharmaceutical companies are recovering, while banks have been in an extremely flourishing situation since the election of Donald Trump.
