On Monday, global technology stocks tumbled as investors reacted to the emergence of DeepSeek, a Chinese AI startup offering a low-cost, efficient model that threatens to disrupt industry leaders like Nvidia. The selloff wiped $592.7 billion off Nvidia’s market value, marking a record one-day loss for a Wall Street stock. The Nasdaq dropped 3.1%, with Nvidia shares falling nearly 17%, accompanied by significant declines for Broadcom, Microsoft, and Alphabet.
DeepSeek’s AI assistant, launched last week, is cheaper and less resource-intensive than its competitors. By Monday, it had surpassed ChatGPT in downloads from Apple’s App Store, sparking fears of reduced demand for expensive chips and data center infrastructure. DeepSeek’s efficiency also challenged the “bigger is better” mindset that has driven AI innovation, prompting a re-evaluation of growth expectations in the sector.
This development reverberated globally, triggering declines in Asia and Europe, with Japan’s SoftBank and Europe’s ASML among the hardest hit. Meanwhile, investors flocked to safe-haven assets like government bonds and currencies, with U.S. Treasury yields dropping and the yen and Swiss franc rallying.
Despite the selloff, some analysts see opportunity. Daniel Morgan of Synovus Trust Company argued the decline was an overreaction, noting that DeepSeek’s mobile-focused AI solutions don’t directly compete with Nvidia’s lucrative data center chips. Nvidia’s stock, which had soared in 2023 and 2024 due to AI optimism, remains a top pick for long-term investors betting on data center growth.
Silicon Valley executives praised DeepSeek’s innovation, dubbing it AI’s “Sputnik moment.” While concerns remain about its impact on the AI market, proponents believe the rise of affordable AI will accelerate real-world applications, reshaping industries and boosting global adoption. For now, the tech sector braces for further shifts as the race to lead in AI intensifies.