DeepSeek AI Causes NVIDIA Market Crash, Largest Loss in History

Kapanlagi.com - In a major surprise in the tech world, Nvidia, the giant that has long been a pioneer in the artificial intelligence (AI) revolution, has just experienced a shocking loss in the stock market. In one day, Nvidia's market capitalization plummeted by nearly $600 billion, marking the largest drop ever recorded on Wall Street.

What caused this massive shock? The answer lies in the launch of DeepSeek AI, an advanced innovation from China that offers cutting-edge AI technology at a significantly lower cost. Developed by the startup High-Flyer, DeepSeek AI has managed to capture global attention due to its efficiency, which is claimed to be superior compared to many existing AI solutions. This technology is not only energy-efficient but also has the potential to displace the positions of AI industry leaders.

This situation has triggered a wave of concern among global investors regarding Nvidia's future dominance, especially amid the rapid development of AI technology from China. So, how exactly can DeepSeek shake the foundations that Nvidia has built? Stay tuned for this interesting review, summarized from various sources by Kapankagi.com on Tuesday (28/1).

1. Nvidia's Losses: A Black Mark on Wall Street

Last Monday, Nvidia made dark history on Wall Street with the largest loss ever recorded. The shares of this tech giant plummeted sharply by 17% at market close, erasing a market capitalization of $589 billion in an instant. This decline not only marks a black mark for Nvidia, but also makes it the largest one-day loss ever experienced by any company in the US.

With its market value shrinking from $3.5 trillion to $2.9 trillion, Nvidia is now knocked off the top spot and is behind Apple and Microsoft in the list of the most valuable companies in the world. This striking loss is more than double the daily loss experienced by Meta in February 2022.

It’s not just Nvidia that has been affected; other tech stock indices also fell. The Nasdaq index dropped by 3.1%, while major companies like Arm, Broadcom, and Oracle also saw declines in their stock values.

"Nvidia lost a market capitalization of $589 billion on Monday, making it the largest one-day decline in history. This is more than double the loss Nvidia experienced on September 3, 2024, and far greater than Meta's loss of $251 billion on February 3, 2022, which was the third-largest daily loss," wrote Forbes.com.

2. DeepSeek AI: A Versatile New Competitor

DeepSeek AI is now capturing attention on the global technology stage thanks to the brilliant innovation from High-Flyer, a startup based in Hangzhou, China. By offering AI solutions that are significantly more affordable compared to models from OpenAI or Meta, DeepSeek leverages advanced domestically-made chips that eliminate reliance on US technology.

Its latest model, DeepSeek-R1, is not only capable of competing with the performance of OpenAI's GPT-4 in various fields, such as mathematics, coding, and natural language reasoning, but is also built with remarkable efficiency.

Thanks to this approach, DeepSeek has successfully created a more budget-friendly AI application for developers, while simultaneously threatening Nvidia's dominance, which has long relied on the sale of exorbitantly priced GPUs.

3. Why is DeepSeek Shaking Up Nvidia?

The launch of DeepSeek AI has shaken the industrial world in an unprecedented way, transforming the paradigm around artificial intelligence technology. Until now, Nvidia has been viewed as the irreplaceable king in the GPU market due to its crucial role in training large AI models.

However, the presence of DeepSeek proves that the development of advanced AI models can be done efficiently and cost-effectively, without being tied to Nvidia's expensive GPUs.

This success has raised concerns among investors, who worry that giant companies like Meta, Tesla, or OpenAI might replicate this innovative strategy. If that happens, demand for Nvidia's GPUs could plummet, threatening the sustainability of their core business model.

4. Global Impact of DeepSeek's Dominance

The success of DeepSeek has shaken the technology world, not only providing a fresh breeze for Nvidia but also reshaping the competitive landscape in the global market. This rising AI application has now become a star in the App Store, topping charts in the US, UK, and China.

However, behind the euphoria, the drastic decline in Nvidia's market capitalization raises concerns about a domino effect on the global economy, particularly in the technology sector that heavily relies on their innovations.

As a giant in the AI industry, the decline in demand for Nvidia's products could signal a broader growth slowdown, potentially shaking other companies in its ecosystem. With uncertainty looming, the market is now awaiting further developments to gauge the depth of its long-term impact.

5. What Are the Next Steps for Nvidia?

Although Nvidia still reigns in the technology world, the significant losses it has suffered serve as an emergency signal to quickly adapt to the sweeping changes. In an effort to maintain relevance, Nvidia is required to produce new innovations that are more efficient and capable of competing with technological breakthroughs from China.

The plummeting stock prices and sharply declining market capitalization have created waves of concern among investors and have also shaken the global economy. While Nvidia emphasizes how crucial their products are in the artificial intelligence industry, the pessimistic market reaction reflects a potential threat of slowing growth in the technology sector.

Now, investor attention is focused on Nvidia's next strategic steps, especially in facing challenges from innovations like DeepSeek. If Nvidia fails to maintain its position, it may lose its throne in the increasingly competitive global AI market.

6. What makes DeepSeek AI superior to OpenAI?

DeepSeek uses efficient learning methods that require lower computational power, making it more cost-effective.

7. Why is Nvidia experiencing significant losses?

The launch of DeepSeek AI has raised concerns that the demand for Nvidia GPUs will decline, threatening their business model.

8. What is the impact of the DeepSeek launch on the global technology market?

DeepSeek intensifies competition by offering high-performance AI solutions at low costs, affecting market dynamics.

9. What steps should Nvidia take to recover?

Nvidia needs to develop cost-effective technology and establish strategic partnerships to maintain relevance in the AI market.

(kpl/rmt)