- Nvidia faced a share value drop of 17%
- It costs a market record ~$600B loss
- DeepSeek shows great results compared to OpenAI
- DeepSeek LLMs cost significantly less than competitors
Nvidia faced a share value drop of 17%, which means ~$600B loss for the stock market, and became the largest single-day U.S. company capital loss in market history.
It happened after the release of Chinese DeepSeek, a series of free and open-source large language models that look highly competitive to the latest OpenAI models.
What Exactly Happened with Nvidia Stocks & DeepSeek LLMs?
Trading closed this Monday with a big drop in the tech giants, with Nvidia being the most notable drop.
We’ve already seen record highs as well as record lows for Nvidia over the past couple of years, but this surpassed the previous ones. After all, Nvidia’s capitalization has skyrocketed over those couple of years, from $364.18B in 2022 to $1.223 T in 2023 to $3.355 T in 2024.
So a 17% drop cost the market a record ~$600B, becoming the largest single-day U.S. company capital loss in market history.
This happened after the Chinese AI lab DeepSeek released a series of their open-source LLMs. First, we saw DeepSeek V3, which significantly outperformed similarly sized models from OpenAI and other players according to benchmarks while costing only ~$6M to train using 2788K hours of Nvidia H800 GPU.
And, immediately after OpenAI, we saw they add Reasoning to their models, and we got DeepSeek R1, which is nearly as good as, and slightly superior in some aspects of the solution, such as code and math.
Remarkably, DeepSeek managed to take away the honorable first place from ChatGPT on the AppStore.
For such cases, Donald Trump took proactive measures by announcing a record $500B investment in AI infrastructure, and this shows that it’s not just about the amount of investment but also the efficiency of its use, which Chinese companies seem to be leading by example.
Of course, given that the drop was not localized to Nvidia, we can assume that there may be some other indirect causes for this drop. For example, yesterday’s migration disputes, and the resulting tariffs with Colombia, could have a big impact on bilateral oil trade.
Conclusion
The market is always a large sum of more and less obvious factors that can directly or indirectly affect the bottom line. However, what is alike here is the immediate market reaction to a major technical breakthrough, and the effect on related companies.
Still, it pays to constantly and extensively analyze related factors, and expect further moves from key players. Be aware and stay tuned.
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