(Jan 27): Nvidia Corp’s plunge, fuelled by investor concern about Chinese artificial-intelligence (AI) startup DeepSeek, erased a record amount of stock-market value from the world’s largest company.
Nvidia shares tumbled as much as 13% soon after the opening bell on Monday, erasing about US$465 billion (RM2.04 trillion) from the company’s market capitalisation. That eclipsed the previous record — a 9% drop in September that wiped out about US$279 billion in value — and was the biggest in US stock-market history.
The drop rippled through the rest of the market due to how much weight Nvidia has in major indices. Including Monday’s slump, Nvidia sell-offs have caused eight of the top 10 biggest one-day drops in the S&P 500 Index, based on market value, according to data compiled by Bloomberg. The S&P 500 fell as much as 2.3% early on Monday, and the Nasdaq 100 tumbled as much as 3.6% before paring the drop.
The semiconductor maker is leading a broader sell-off in technology stocks after DeepSeek’s low-cost approach reignited concerns that big US companies have poured too much money into developing AI, since the Chinese firm appears to provide a comparable performance to Western chatbots at a fraction of the price.
The latest AI model of DeepSeek, released last week, is widely seen as competitive with those of OpenAI and Meta Platforms Inc. The open-sourced product was founded by quant-fund chief Liang Wenfeng, and is now at the top of Apple Inc’s App Store rankings.
“Concerns have immediately emerged that it could be a disruptor to the current AI business model, which relies on high-end chips and extensive computing power and hence energy,” Jefferies analysts said in a note to clients.
Nvidia has been the biggest beneficiary of the influx in spending on AI because they design semiconductors used in the technology. While that heavy spending looks poised to continue, investors may be more wary of rewarding companies that aren’t showing a sufficient return on the investment.
Meta announced plans last Friday to boost capital expenditures on AI projects this year by about half to as much as US$65 billion, sending its shares to a record high. That came on the heels of OpenAI, SoftBank Group Corp and Oracle Corp announcing a US$100 billion joint venture called Stargate to build out data centres and AI infrastructure projects around the US.
In a bid to stall China’s progress in AI, the US has banned the export of advanced semiconductor technologies to the country, and is limiting sales of advanced Nvidia AI chips to others. But DeepSeek’s progress suggests Chinese AI engineers have found a way to work around the export bans, focusing on greater efficiency with limited resources.
Read also:
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China’s DeepSeek tops iPhone downloads and spurs Asia stocks
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