Nvidia’s Freefall: DeepSeek’s Impact Causes Historic Stock Loss

Nvidia's stock value dropped over 17% and lost nearly $600 billion in market value due to the emergence of DeepSeek's new R1 model, causing concerns about the impact on sales of high-performance AI chips and caution among investors.

Nvidia's stock value plummeted by over 17%, causing the company to lose nearly $600 billion in market value.
The introduction of DeepSeek's new R1 model played a significant role in this decline.
DeepSeek's AI models are seen as direct rivals to other popular models and can outperform them with lower costs and being open source.

nVidia’s stock took a major hit on Monday, dropping over 17% and causing the company to lose nearly $600 billion in market value. This is one of the biggest declines Nvidia has experienced in recent years, and it can partly be attributed to the emergence of DeepSeek’s new R1 model.

As soon as the US stock markets opened, Nvidia’s stock value plummeted by more than 13%, wiping out $465 billion in market value. This drop surpassed the 9% decline and $279 billion loss experienced in September of last year. The introduction of DeepSeek models played a significant role in this decline, as investors began selling their shares en masse upon realizing that the low cost associated with DeepSeek’s model suggests excessive spending on American companies.

It’s worth noting that DeepSeek’s AI models are seen as direct rivals to OpenAI’s GPT and Meta’s Llama models, and in some cases, they can even outperform both with lower costs and, of course, being open source.

Concerns quickly arose about how this could impact the sales of high-performance chips used for training AI models. Remember, Nvidia is one of the largest manufacturers of AI chips in the market.

However, with the emergence of DeepSeek’s models, investors are now more cautious about investing in entities that don’t offer the necessary returns.

The next few days will be crucial in assessing the long-term effects on the markets, but it’s clear that the introduction of DeepSeek’s LLM models is causing ripples across various sectors, with Nvidia being one of the first to feel the pressure.

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Background Information

About nVidia:

NVIDIA has firmly established itself as a leader in the realm of client computing, continuously pushing the boundaries of innovation in graphics and AI technologies. With a deep commitment to enhancing user experiences, NVIDIA's client computing business focuses on delivering solutions that power everything from gaming and creative workloads to enterprise applications. for its GeForce graphics cards, the company has redefined high-performance gaming, setting industry standards for realistic visuals, fluid frame rates, and immersive experiences. Complementing its gaming expertise, NVIDIA's Quadro and NVIDIA RTX graphics cards cater to professionals in design, content creation, and scientific fields, enabling real-time ray tracing and AI-driven workflows that elevate productivity and creativity to unprecedented heights. By seamlessly integrating graphics, AI, and software, NVIDIA continues to shape the landscape of client computing, fostering innovation and immersive interactions in a rapidly evolving digital world.

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Technology Explained

LLM: A Large Language Model (LLM) is a highly advanced artificial intelligence system, often based on complex architectures like GPT-3.5, designed to comprehend and produce human-like text on a massive scale. LLMs possess exceptional capabilities in various natural language understanding and generation tasks, including answering questions, generating creative content, and delivering context-aware responses to textual inputs. These models undergo extensive training on vast datasets to grasp the nuances of language, making them invaluable tools for applications like chatbots, content generation, and language translation.