DeepSeek AI Shakes Global Markets, Triggers Record $593 Billion Loss for Nvidia

The emergence of Chinese start-up DeepSeek AI has sent shockwaves through global stock markets, leading to an unprecedented $593 billion loss in Nvidia’s market capitalization—the largest single-day decline in Wall Street history. The Silicon Valley chip giant’s shares plummeted 17% on January 27, following the launch of DeepSeek’s low-cost, open-source AI models, which have sparked fears of a shift in the AI industry’s competitive landscape.
The market disruption extended beyond Nvidia, with the S&P 500 slipping and the Nasdaq plunging over 3%. Investors reacted to DeepSeek AI’s competitive edge—its models, DeepSeek-V3 and DeepSeek-R1, are developed at a fraction of the cost of US alternatives. Analysts believe the company’s free AI assistant, reportedly on par with OpenAI’s ChatGPT and Google’s Gemini, is reshaping the industry’s dynamics.
DeepSeek AI has experienced a meteoric rise, surpassing ChatGPT in US iOS App Store downloads and gaining traction in key markets, including the UK, Australia, Canada, China, and Singapore. According to a research paper, its DeepSeek-V3 model was trained using Nvidia’s H800 chips—a lower-tier option—at a cost of under $6 million. The latest DeepSeek-R1 model is claimed to be 20 to 50 times cheaper than OpenAI’s equivalent, raising concerns over cost efficiency advantages.
Global Market Fallout
DeepSeek’s disruption has rattled other tech giants and semiconductor firms:
- Broadcom Inc. tumbled 17.4%,
- Microsoft, a major investor in ChatGPT, slipped 2.1%,
- Alphabet (Google’s parent company) dropped 4.2%,
- The Philadelphia Semiconductor Index recorded a 9.2% decline, its worst since March 2020,
- Marvell Technology suffered Nasdaq’s biggest loss, plunging 19.1%.
The ripple effect spread to global markets, with Japan’s SoftBank Group sliding 8.3%, while Europe’s ASML fell 7%. US-based Vertiv Holdings, a key data center infrastructure provider, saw a staggering 29.9% decline. Power companies like Vistra (-28.3%), Constellation Energy (-20.8%), and NRG Energy (-13.2%) also faced heavy losses as expectations of an AI-driven energy demand surge weakened.
A Challenge to Silicon Valley’s AI Dominance
Despite its market-shaking debut, little is publicly known about DeepSeek AI. The start-up is primarily owned by Liang Wenfeng, co-founder of hedge fund High-Flyer. Analysts credit its disruptive pricing strategy for its rapid success, positioning it as a major threat to US tech giants like OpenAI, Nvidia, and Google.
As AI competition intensifies, DeepSeek’s rise signals a new era of cost-efficient AI innovation, forcing established players to adapt—or risk falling behind.