The recent rise of DeepSeek, a Chinese AI startup, has sent shockwaves through the global tech industry, particularly affecting U.S. giants like Nvidia. By contrast, developing a low-cost, high-performance AI model, DeepSeek is challenging the belief that AI dominance requires massive investments and cutting-edge technology.
DeepSeek’s R1 model, built at a fraction of the cost of its U.S. counterparts, has raised concerns about the sustainability of the current AI investment model. As a result, its emergence threatens to disrupt the high-end GPU market—a key pillar of AI infrastructure—posing a direct challenge to companies like Nvidia.
Market Turmoil: Nvidia Takes a Hit
The market reaction has been swift and dramatic. Nvidia’s stock has plummeted, erasing nearly $600 billion in market value, while the broader tech sector has lost an estimated $1 trillion, underscoring the industry’s vulnerability to disruption.
Nvidia’s valuation has now dropped to $2.9 trillion. Competitor Oracle’s stock declined by more than 8%, while data analytics firm Palantir fell 6%. Alphabet shares slid 4%, and Microsoft, a key investor in OpenAI, saw a 2% decline.
Dell Technologies also suffered an 8% drop, while the Nasdaq and S&P 500 recorded their largest single-day percentage declines of 2025. Meanwhile, even energy stocks took a hit, with Siemens and GE Vernova plunging over 20% on Monday, contributing to a combined $1 trillion market value loss across industries.
