DeepSeek AI Disrupts US Tech Stocks, Nvidia Faces $432 Billion Market Cap Loss
Chinese AI startup DeepSeek disrupted the global tech market, causing Nvidia’s shares to plummet by 12%, with a potential $432 billion market cap loss.
US tech stocks faced a significant blow on Monday after Chinese AI startup DeepSeek challenged America’s dominance in the industry. The announcement caused a dramatic plunge in shares of leading chipmakers, including Nvidia, which saw a sharp 12% drop in pre-market trading. If the decline persists, Nvidia could lose a staggering $432 billion from its market capitalization.
As of 6:27 AM EST, Nvidia’s shares were trading at $125.05, down from its previous close of $142.62. In Europe, Netherlands-based semiconductor firms ASML and ASM International also witnessed steep declines, with their shares falling between 10-14%.
Nvidia, known for designing semiconductors that power AI technologies, has greatly benefited from the AI spending surge in recent years. Similarly, ASML’s advanced machines for high-end chip production have positioned it as a key player in the global market.
DeepSeek AI’s Disruptive Impact
DeepSeek, a Chinese AI model released last week, has become a game-changer, posing a credible threat to US-based tech giants like OpenAI and Meta. Unlike its competitors, the DeepSeek-V3 model is cost-effective, running on less advanced chips while maintaining efficiency. Reports indicate it was developed for just $5.6 million—significantly less than what US tech companies typically spend.
Adding to its appeal, DeepSeek’s open-source approach has made it widely accessible, leading to its surge in popularity. It has already climbed to the top rankings on Apple Inc.’s App Store, showcasing its rapid adoption.
US Tech Giants Under Pressure
The fallout extended beyond Nvidia, with major US tech companies facing notable losses. Microsoft and Meta Platforms each fell over 3%, while Alphabet, Google’s parent company, shed 3%, and Apple dropped 1.5%.
This turbulence in the stock market comes just before Microsoft, Meta, and Apple are set to release their quarterly earnings this week. Meanwhile, US stock futures pointed to a tough opening for Wall Street, as Dow E-minis and S&P 500 E-minis dropped nearly 2%, and the Nasdaq 100 E-minis crashed by over 3%.
Aviation Watchdog’s Response
As the AI market evolves, Chinese startups like DeepSeek are poised to reshape the landscape, challenging the dominance of established US tech giants.