Nvidia, heralded as the most valuable publicly traded company just last week, faced a dramatic turn of events Monday, Jan. 27. The tech giant saw its value drop by $600 billion, marking the largest single-day fall in U.S. stock market history.
The loss was triggered by the emergence of a new competitor in the artificial intelligence industry: China-based DeepSeek.
DeepSeek challenges Nvidia’s market dominance
DeepSeek, a rising AI company, has positioned itself as a serious rival to Nvidia. The company’s chatbot is now available in the Apple and Google app stores. Investors quickly responded to the news, with many selling off their Nvidia stock, signaling concern about the new competition.
According to industry reports, DeepSeek’s AI model is cheaper than Nvidia’s and formidable against established models like ChatGPT. The company claims it developed its AI for under $6 million, compared to the more than $30 billion Nvidia has spent over one decade to develop its specialized chips for AI data processing.
Nvidia, which powers its AI data with high-end chips designed specifically for AI development, now faces competition from a more affordable alternative. Companies like Meta and Amazon rely on Nvidia’s graphics processing units, also known as GPUs, to train their AI models. Still, the increasing affordability of DeepSeek’s technology could potentially disrupt the market.
The White House’s AI and crypto czar recently emphasized that the swift market shift underscores the intense global race for AI innovation and dominance.
Broader AI and tech sectors also took a hit on the stock market Monday, with other companies like Oracle seeing a drop.
