Stock Market: Nvidia Takes a Sharp Plunge

Who would have believed it! Nvidia has just erased $589 billion in market capitalization. A drop that marks a turning point in the technology sector! The Chinese startup DeepSeek seems to worry stock market investors with its low-cost AI model. All the details below!

Here’s how DeepSeek is shaking up the stock market and the technology industry

The Chinese startup DeepSeek has recently launched an open-source AI offering competitive performance at a fraction of the cost of existing solutions. This innovative business model prompts stock market investors to reconsider the viability of tech giants.

The Nvidia stock plunged by 17% on Monday according to Bloomberg. It erased $589 billion from its valuation. A historic record! This move also triggered a drop of:

• 1.5% of the S&P 500,
• nearly 3% of the Nasdaq 100.

This serves as a reminder of the importance of indices in the stock market! According to analysts, this could disrupt the current AI business model dominated by companies like Meta and OpenAI.

Nvidia stock plummets, loses record $589 billion as DeepSeek prompts questions over AI spending https://t.co/4PHoVAASlm$NVDA -16.97% pic.twitter.com/xmhUlCiS1e

— Yahoo Finance (@YahooFinance) January 27, 2025

A threat to invested capital in AI?

As a leader in semiconductors, Nvidia is the main beneficiary of massive investments in AI. However, the rise of DeepSeek raises concerns about return on investment in costly solutions.

Meanwhile, stock market players like Meta have announced colossal expenditures (reaching $65 billion) to develop AI projects by 2025. For their part, OpenAI and SoftBank have unveiled a $100 billion project to build AI-dedicated infrastructure in the United States.

The historic stock market rout of Nvidia thus highlights the impact of innovations like those from DeepSeek in the technology sector. As AI evolves, the race for dominance in capital markets and financial technologies intensifies. This creates opportunities and challenges for stock market investors!