NVIDIA Loses $384 Billion Market Value in Hours Following China’s DeepSeek Shock to Western Markets

This article is for informational purposes only and does not constitute investment advice. The author does not hold any stocks mentioned herein.

Market Turmoil Following DeepSeek’s AI Breakthrough

Shares of NVIDIA Corporation experienced a staggering loss, plummeting over $300 billion in market value during premarket trading today. This dramatic decline comes on the heels of speculation surrounding the capabilities of Chinese AI startup DeepSeek, which has reportedly developed models that can rival those of American companies, but at a significantly lower cost. DeepSeek’s R1 model recently gained traction, emerging as the most downloaded app on Apple’s App Store over the weekend.

Global Chip Maker Shares Plummet

NVIDIA’s shares fell by 11% during premarket trading, joining peers such as Japan-based companies and European chip equipment manufacturer ASML, who also reported modest share price decreases. The selloff initiated early in Japan and significantly impacted data center stocks, ASML, and NVIDIA. The latter, particularly vulnerable due to its status in the semiconductor industry, saw ASML shares drop by an alarming 11% in Europe as anticipation mounts for its forthcoming earnings report, which will shape expectations for AI-related growth in 2025.

Last year, ASML’s stock already dropped 22% due to weak demand projections for 2025, compelling investors to adjust their expectations concerning AI-related revenue. As of this morning, ASML’s American Depositary Receipts (ADRs) on the NASDAQ fell by 11%, erasing approximately $30 billion from its total market valuation. Excluding today’s losses, these ADRs have declined by 16% over the last six months.

SoftBank and Other Chipmakers Suffer Significant Losses

SoftBank, the Japanese investment firm that recently made headlines with its involvement in a $500 billion AI initiative, saw its shares decrease by 8.32%.Similarly, Advantest, a chip testing equipment manufacturer, faced a drop of 8.6%.

NVIDIA Hits Hardest by Market Reaction

NVIDIA’s massive market capitalization, which had made it the world’s most valuable company just last week, means that it has taken the brunt of the fallout from the reactions to DeepSeek’s advancements. The company’s shares have lost around 11% in premarket trading, translating to a loss of approximately $384 billion since last week’s closing price. Interestingly, NVIDIA’s shares traded in Germany showed an even steeper decline of 11.7%.

Broadcom and AMD Experience Declines

Following NVIDIA, Broadcom is another semiconductor designer also reeling from the impacts of market speculation. After witnessing a substantial 38% surge in December, fueled by management’s optimistic projections regarding AI chip sales, Broadcom’s stock has taken a sharp downturn. Given the uncertainty around demand for AI chips, the company’s shares have fallen by 10.5% in premarket trading, effectively erasing $100 billion from their previous Friday valuation.

Meanwhile, AMD, a smaller competitor, has seen a 5.3% decrease in premarket shares. Although AMD offers products that cater to AI workloads, NVIDIA’s GPUs are still recognized as the premier choice for this market. Similarly, Arm Ltd, a British chip design firm, reported a decline of 9.43% despite its CEO’s assertions that their CPUs complement all AI GPUs.

Major Tech Firms Reflect Market Anxiety

Other technology companies have not been immune to the stock market’s turmoil. Shares of Microsoft are down by 6%, while Meta, Facebook’s parent company, has seen a dip of 4.6%.Investors are questioning the rationale behind their substantial investments in AI technology. Conversely, Apple, a consumer technology giant benefiting from AI trends, remains relatively stable, with its shares dipping only 0.9% in premarket trading.

As the market continues to react to developments in AI and semiconductor capabilities, it remains clear that investor sentiment is sensitive to advancements that could reshuffle the competitive landscape.

Source & Images