With the launch of the Chinese AI chatbot DeepSeek-R1, global stock exchanges have been placed on guard and triggered a $1 trillion (US dollar) selloff from Monday’s US tech stocks. DeepSeek’s low-cost artificial intelligence (AI) model not only threatens U.S. technology leadership but has also triggered the $600 billion drop in the market cap of Nvidia, which is the single largest one-day decline in U.S. equity market capitalization. This contagion effect resulted in the Nasdaq index closing down 3% and industry movers and shakers in the technology sector alone dropped 94 billion dollars in their net worth.
DeepSeek-R1 AI $1 Trillion Stock Selloff Causes Nvidia’s Record Loss and Fallout for Tech Leaders
In a stunning (20.7 times, 100 million USD depreciation) the CEO/co-founder of Nvidia Jensen Huang presented his testimony for a mind-blowing plunge in his net worth after the recent market crash of Nvidia stock. This left Huang with a net worth of $103.7 billion, dropping him from 10th to 17th on Forbes’ global net worth list. Other tech leaders were similarly impacted:
Oracle’s chairman, Larry Ellison, has now shed $27.6 billion and comes in at 50th position on the rankings of wealth. Each of the net worth of Larry Page and Sergey Brin the Google founders decreased by $6.3 billion and “5.9 billion, respectively. Elon Musk Tesla also lost $5.3 billion
The selloff emphasizes the vulnerability of tech giants as DeepSeek, a Chinese AI competitor, enters the global stage with a lean and disruptive approach to AI development.
Analysts Caution Against Overreaction
Though there is an acute response in the market, certain analysts consider the correction a market overreaction. Tech analyst Gene Munster showed demand for top-end AI hardware, in particular Nvidia is still brisk with companies and governments trading off with speeds and price points in order to stay in the latest wave of AI capacity.
In the meantime, Scale AI CEO Alexandr Wang also proposed that DeepSeek’s claimed development cost of $5.6M is only a part of the picture. DeepSeek probably has assumed access to a very large formation of Nvidia’s H100 chips (priced at $1 Billion), while export controls are in force.
[As] technology companies are about to publish their fourth-quarter results – with Meta, Microsoft, and Tesla – the financial community is most interested in the role of AI investments in the next few years’ business plans of each company.
Also, see: DeepSeek: The Game-Changing Chinese AI Chatbot Reshaping the Industry