Nvidia Corp.’s plunge on Monday, driven by investor concerns over Chinese artificial-intelligence startup DeepSeek, erased a record amount of value from the world’s largest company. The stock tumbled 17%, the biggest drop since March 2020, wiping out $589 billion from the company’s market capitalization. This surpassed the previous record of a 9% drop in September that erased about $279 billion in value, making it the largest one-day drop in US stock market history. The decline had a ripple effect on the broader market, with the S&P 500 falling 1.5% and the Nasdaq 100 plummeting nearly 3%.
The selloff was triggered by concerns that big US companies have invested too much in developing artificial intelligence (AI) and that a lower-cost approach from DeepSeek may disrupt the current AI business model. The Chinese firm’s latest AI model is seen as competitive with those of OpenAI and Meta Platforms, and is currently at the top of Apple’s App Store rankings. The open-sourced product was founded by Liang Wenfeng, a quant-fund chief, and is gaining popularity.
Nvidia, a semiconductor maker, has been a major beneficiary of the influx in spending on AI and has led a broader selloff in technology stocks. The company’s designs are used in AI technology, and investors are growing wary of rewarding companies that aren’t showing a sufficient return on investment. This is despite Meta’s announcement on Friday to boost capital expenditures on AI projects by about half to as much as $65 billion. OpenAI, SoftBank Group, and Oracle Corp. also announced a $100 billion joint venture to build out data centers and AI infrastructure projects in the US.