American chip giant NVIDIA (NVDA, Financial) experienced a historic market cap loss of nearly $600 billion, marking the largest single-day value drop in U.S. stock history. NVIDIA's stock plummeted almost 17% to $118.42, its steepest decline since March 2020. Just last week, NVIDIA had surpassed Apple (AAPL) as one of the world's most valuable publicly traded companies. However, this drop has dethroned NVIDIA, causing the tech-heavy Nasdaq index to fall by 3.1%.
The decline was primarily driven by market concerns over competitive pressure from Chinese AI lab DeepSeek. Late last month, DeepSeek released a free open-source large language model, reportedly developed in just two months at a cost of under $6 million, using a simplified version of NVIDIA's H800 chip.
NVIDIA's GPUs dominate the U.S. AI data center chip market, with tech giants like Alphabet (GOOG, GOOGL), Meta (META), and Amazon (AMZN) investing billions in NVIDIA's chips for AI model training and operation. Despite this, Cantor analysts noted that DeepSeek's latest technology has raised concerns about declining computational demand and peak GPU spending. Nevertheless, analysts still recommend buying NVIDIA stock, arguing that AI advancements will likely increase demand for computing power.
NVIDIA's downturn also impacted other chip and data center companies. U.S. chipmaker Broadcom (AVGO) saw its stock drop 17%, erasing $200 billion in market value. Data center companies reliant on NVIDIA GPUs, like Dell (DELL), HP (HPQ), and Super Micro Computer (SMCI), experienced stock declines of at least 5.8%. Oracle (ORCL), involved in the latest U.S. AI plan, saw a 14% stock decrease.
