Nvidia's stock plummeted, wiping out nearly $600 billion market value
Nvidia's stock plummeted 17% on Monday, wiping out nearly $600 billion in market value, as investors grappled with the emergence of DeepSeek, a Chinese AI startup challenging the dominance of established tech giants.
DeepSeek has unveiled R1, its reasoning model, which reportedly surpassed OpenAI's latest model in several third-party evaluations, raising concerns about the dominance of existing AI models.
Furthermore, the company recently released a free, open-source large language model developed with a budget of less than $6 million over two months, challenging the high-cost development models pursued by many tech giants.
CNBC reported that this unprecedented development has ignited questions about the future of AI development and the potential for a seismic shift in the industry.
Read more: Nasdaq and S&P 500 tumble as AI concerns shake tech stocks
Nvidia's dramatic decline underscored the market's growing apprehension. As a key supplier of high-performance graphics processing units crucial for training advanced AI models, Nvidia has been a major beneficiary of the AI boom.
However, according to CNBC, DeepSeek's achievements suggest the possibility of more cost-effective AI development, potentially reducing the demand for high-end hardware and disrupting Nvidia's dominance. This sentiment was echoed by a significant decline in Broadcom's stock, another major player in the AI hardware ecosystem.
The impact of DeepSeek's innovations extends beyond hardware manufacturers. Tech giants are now facing critical questions about their AI strategies.
Meta, for instance, has committed to investing between $60 billion and $65 billion in AI infrastructure in 2025. While some analysts see potential cost-saving opportunities arising from DeepSeek's breakthroughs, others remain cautious, citing the need for further validation of DeepSeek's claims.
Microsoft, heavily invested in OpenAI, also faces uncertainty. Its reliance on proprietary models and high-cost infrastructure could be challenged by the rise of more accessible and cost-effective open-source alternatives.
Tesla, which has been aggressively investing in AI for its self-driving car technology, may also encounter challenges. The emergence of more affordable and accessible AI models could disrupt the company's development timeline and potentially impact the cost and feasibility of its autonomous driving ambitions.
Apple, however, appears relatively insulated from the immediate impact of DeepSeek's advancements. Its focus on integrating AI capabilities into its existing product ecosystem, coupled with lower capital expenditures compared to other tech giants, may mitigate the risks associated with the evolving AI landscape.
