DeepSeek’s Low-Cost AI Model Triggers Historic NVIDIA Stock Crash, Losing $600B

Liang Wenfeng, DeepSeek Founder

NVIDIA, the world’s top AI chipmaker, saw its market value plunge by nearly $600 billion in a single day after Chinese startup DeepSeek unveiled an advanced AI model that challenges industry giants like OpenAI and Google. DeepSeek’s breakthrough, achieved with minimal resources, raised concerns about the future demand for NVIDIA’s high-end GPUs, triggering a 17% drop in its stock—the largest single-day loss in market capitalization history.

DeepSeek’s AI model, R1, delivers capabilities comparable to ChatGPT but was developed for just $5.6 million in computing costs—far below the billions spent by U.S. tech firms. The news sent shockwaves through the market, causing the Nasdaq to drop 3.1% and the S&P 500 to fall 1.5%.

The development is particularly striking given U.S. efforts to restrict China’s access to advanced AI chips. Despite these limitations, DeepSeek’s innovation has shaken investor confidence and raised questions about the AI industry’s trajectory.

Sources: CNN, Innovation Village