Nvidia has experienced a staggering 17 per cent drop in value, resulting in a historic loss of nearly $1 trillion in market capitalisation, from $3.49 trillion to $2.88 trillion in just one day. This decline triggered broader repercussions across Wall Street, with the Nasdaq composite falling 3.5% and S&P 500 dropping 1.8%. Notable rivals like Marvell, Broadcom, and TSMC also faced significant losses.
The turmoil was exacerbated by the emergence of DeepSeek, a lesser-known AI start-up, which boasts advanced capabilities at a fraction of the cost of established players like OpenAI. Its innovative model raised concerns among investors about the sustainability and profitability of current AI investments, prompting a significant market sell-off. This shift particularly impacted energy shares, vital for powering AI data centres, with Constellation Energy, for example, plummeting nearly 20%.
As news of DeepSeek’s advancements spread globally, markets reacted with a flight towards safer bonds, decreasing long-term Treasury yields. While some analysts speculate that the recent sell-off may be overreactions, others see potential opportunities in undervalued Chinese AI companies amidst this upheaval. Investors are now closely monitoring US tech firms as they report earnings in the coming days, setting the stage for further market fluctuations.