How Did Nvidia Lose $589B in a Single Day!

Jan 28, 2025By Peak Square Ventures
Peak Square Ventures

Nvidia, a leading player in the semiconductor and AI industries, recently faced a significant market downturn, with its stock price dropping over 16% in a single day. This decline resulted in a loss of approximately $589 billion in market capitalization, marking one of the largest single-day value losses in U.S. stock market history. 

New York Post
The catalyst for this sharp decline was the emergence of DeepSeek, a Chinese AI startup that unveiled an advanced AI model developed at a fraction of the cost typically associated with such technologies. DeepSeek's model was reportedly built in just two months for under $6 million, without relying on Nvidia's high-end chips. This development has led investors to question the future demand for Nvidia's products, as more cost-effective AI solutions enter the market. 

MarketWatch
The broader tech sector also felt the impact, with major companies like Alphabet (Google's parent company) and Microsoft experiencing significant declines in their stock values. The S&P 500 tech sector dropped 5.6%, its largest fall since September 2020. 

AP News
In response to these developments, Nvidia emphasized the continued importance of its products in running AI models, stating that while new models can be created using alternative techniques, the inference process still requires significant numbers of Nvidia GPUs and high-performance networking. 

New York Post
This situation underscores the rapidly evolving landscape of the AI industry, where emerging players like DeepSeek are challenging established companies by developing innovative and cost-effective solutions. The long-term implications for Nvidia and the broader tech sector remain to be seen as the market continues to adapt to these disruptions.