# DeepSeek’s Impact Sparks Nasdaq Drop, Reignites Market Worries

- Link: https://www.thailand-business-news.com/markets/191996-deepseeks-impact-sparks-nasdaq-drop-reignites-market-worries
- Published: 2025-01-28T15:36:31+07:00
- Author: Li Zhong

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.

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## 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.

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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.