Nvidia Suffers Record $589 Billion Market Loss Amid AI Competition

SANTA CLARA, Calif. — Nvidia, the semiconductor giant at the forefront of the artificial intelligence revolution, suffered its worst single-day stock drop in nearly five years on Monday, losing $589 billion in market capitalization amid growing competition from Chinese AI firm DeepSeek.

The stock plunged 17% by market close, marking its steepest decline since March 2020, when markets were rattled by the onset of the COVID-19 pandemic. The loss knocked Nvidia from its position as the world’s most valuable company, reducing its valuation from $3.5 trillion to $2.9 trillion, behind Apple and Microsoft.

The sell-off was triggered by concerns over DeepSeek, a Chinese AI company that developed a ChatGPT rival at a fraction of the cost reported by its U.S. counterparts. DeepSeek’s large-language model, trained on Nvidia’s graphics processing units (GPUs), reportedly cost just $5.6 million to develop, raising questions about the sustainability of Nvidia’s dominance in the AI hardware market.

In a statement, a Nvidia spokesperson acknowledged DeepSeek’s advancements, calling it an “excellent AI advancement” that is “fully export control compliant.” However, the spokesperson emphasized that DeepSeek’s model still requires “significant numbers” of Nvidia’s GPUs.

Despite this, analysts expressed concern. “If big U.S. tech companies can learn from DeepSeek to design AI systems with cheaper GPUs, it might not be a happy development for Nvidia,” said Ed Yardeni of Yardeni Research in a note to clients.

Nvidia’s stock decline headlined broader losses in U.S. markets. The S&P 500 fell 1.5%, while the tech-heavy Nasdaq dropped 3.1%. Other major AI technology providers, including chip designers Arm and Broadcom, as well as data storage firm Oracle, all saw declines of at least 10%.

The $589 billion loss is the largest single-day market cap wipeout in history, more than double Nvidia’s previous record loss of $279 billion on Sept. 3, 2024. For context, the loss exceeds the individual market values of corporate giants like UnitedHealth, Exxon Mobil, and Costco.

Nvidia CEO Jensen Huang also felt the impact personally, with his net worth dropping from $124.4 billion to $103.1 billion, according to Forbes estimates. Huang, who owns a 3% stake in the company, remains one of the wealthiest individuals in the tech industry.

Nvidia’s meteoric rise in recent years has been fueled by surging demand for its GPUs, which are essential for training advanced AI models. The company’s net profits soared from $4.8 billion in 2022 to an estimated $66.7 billion in 2024, driven by partnerships with U.S. tech giants like Meta, Tesla, and OpenAI.

However, DeepSeek’s success in developing a cost-effective AI model has cast doubt on Nvidia’s long-term growth prospects. While the Chinese company’s $5.6 million expenditure on Nvidia technology is speculated to be an underestimate, it underscores the potential for more efficient AI development, which could disrupt Nvidia’s market position.

As the AI race intensifies, Nvidia’s ability to maintain its leadership in the face of rising competition will be closely watched by investors and industry experts alike.