NVIDIA lost close to $600 billion in market value last night following a historic drop in value. The 17% share drop has been described as the biggest drop for any company in a single day in U.S. history, and it goes to show just how fragile the AI market is.
According to CNBC, NVIDIA’s stock price plummeted 17% down to $118.58. This is the lowest NVIDIA’s shares have been since the 16th of March 2020, which was during the pandemic. Of course, NVIDIA has grown tremendously since then, overtaking Apple as the most valuable company in the world. But perhaps that is going to change. The share drop has resulted in a 3.1% slide down the ranks on the Nasdaq.
So why did NVIDIA have a rough evening? Well, it was all triggered by a new Chinese artificial intelligence lab called DeepSeek. The company unveiled its free, open-source large language model that it claimed only took two months to develop and cost less than $6 million to build. The company also claimed all this was done using reduced-capability chips from NVIDIA, namely the H800s.
So essentially, DeepSeek claimed its AI models are cheaper than the competition while providing similar or better performance. NVIDIA being the so-called “king of AI,” took a stumble as investors pulled out. It also didn’t help that DeepSeek’s app surpassed OpenAI’s ChatGPT as the most downloaded app in the U.S. over the weekend.
Analysts claim that the release of DeepSeek’s latest technology has caused “great angst as to the impact for compute demand, and therefore, fears of peak spending on GPUs.” However, some analysts say this is a good thing. They claim that the advancements in AI will likely lead to the AI industry wanting more compute, not less. They still recommend buying NVIDIA shares as a result.
The drop in NVIDIA value trickled down the pipe to data centre companies too. These companies are reliant on NVIDIA chips for hardware and sales. Dell, HP, and Super Micro Computer dropped by 5.8%, while Oracle dropped by 14%.
To put this all into perspective, NVIDIA’s drop in value surpassed Meta’s $232 billion loss in 2022 and Apple’s $182 billion loss in 2020. NVIDIA’s decline is more than double the market value of Coca-Cola, and even surpassed the total value of Oracle and Netflix combined.
The knock was so hard that even NVIDIA’s CEO, Jensen Huang’s, net worth took a hit, declining $21 billion. Huang went from being the 10th richest billionaire in the world to the 17th richest.
Source: CNBC
