On Monday, Nvidia braced for an ignominious milestone on Wall Street as its stock—long celebrated as the vanguard of America’s artificial intelligence ascendancy—suffered a profound blow. The catalyst? DeepSeek, a Chinese AI contender, unveiled a ChatGPT rival developed at a fraction of the investment that similar U.S. endeavors demanded.
By mid-afternoon, Nvidia’s shares nosedived by 17%, marking the steepest daily drop since the turbulent days of March 2020, when global markets reeled from the onset of the COVID-19 pandemic. This descent obliterated over $600 billion from Nvidia’s market capitalization, eclipsing the prior record for a single-day loss of $279 billion—also set by Nvidia in September 2024. Meta’s notorious $251 billion wipeout in February 2022 now stands as a distant third.
This precipitous decline not only toppled Nvidia from its perch as the globe’s most valuable enterprise but also reduced its valuation to $2.89 trillion, trailing behind industry behemoths Apple and Microsoft.
The shock reverberated across broader markets, dragging the S&P 500 down 1.8% and slashing the tech-heavy Nasdaq by 3.4%. Other prominent AI players, including chip innovators Arm and Broadcom as well as data management powerhouse Oracle, saw their shares nosedive by at least 12%.
Why Nvidia Shares Tumbled
DeepSeek’s debut of a large-language AI model has rattled the perception of U.S. supremacy in the generative AI landscape. While Nvidia’s GPUs powered the training of DeepSeek’s model, as with many advanced AI systems, the revelation of the project’s minimal expense—reportedly $5.6 million—posed a direct threat to Nvidia’s burgeoning dominance. Although skeptics argue that DeepSeek’s cost estimate might be grossly understated, the revelation undermines a central pillar of Nvidia’s recent meteoric ascent.
From 2022 to 2024, Nvidia’s net earnings surged from $4.8 billion to a projected $66.7 billion, largely propelled by the soaring demand for its GPUs, priced as high as $25,000 each. Major U.S. tech players like Meta, Tesla, and OpenAI have been key drivers of this demand. However, Ed Yardeni of Yardeni Research cautioned that if American tech firms adopt DeepSeek’s cost-efficient methods to engineer AI systems, Nvidia’s golden era could face significant turbulence.
An Astonishing Reality
The magnitude of Nvidia’s $600 billion market value loss is staggering, surpassing the total individual valuations of all but 13 U.S. companies. This erosion exceeds the market capitalization of corporate stalwarts like UnitedHealth, Exxon Mobil, and Costco.
Impact on Leadership
Nvidia’s CEO, Jensen Huang, witnessed his personal fortune dwindle by $21 billion in a single day. His net worth plummeted from $124.4 billion to $103.1 billion, as per Forbes estimates. As Nvidia’s largest individual stakeholder, Huang holds a 3% share in the Silicon Valley juggernaut.
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My Name is Keshav Jha, I am passionate journalist with a knack for delivering engaging stories in the realms of entertainment and health. I am Known for my sharp insights and dynamic storytelling, also keeps readers informed about the latest in celebrity news, movies, wellness trends, and healthcare innovations.