
In a development which jolted the sphere of artificial intelligence (AI) while upending tech stocks globally, Nvidia shares on Monday plummeted 18% owing to the rising popularity of DeepSeek, losing around $589 billion from its total market capitalisation.
Bloomberg reported that the plunge was driven by investor concern over the new Chinese AI tool DeepSeek ammasing countless new users and becoming the top-rated app on the App Store.
This drop in Nvidia Corp's shares is said to be the largest in entire market history, followed by a previous instant when the chip-making giant lost $279bn in September 2024 after sinking 9%, according to AFP.
US “tech dominance is being challenged by China,” said Kathleen Brooks, research director at XTB, a trading platform.
“The focus is now on whether China can do it better, quicker and more cost-effectively than the US, and if they could win the AI race,” she added.
The AI chatbot, developed by China-based startup DeepSeek, outshone the dominance of US-based bellwethers in the landscape of AI, outperforming rival AI assistants with a fraction of investments made by US tech giants.
The company said the cost of building DeepSeek R1 was only $5.6 million, which makes up only for peanuts compared to the billion-dollar investments typical US-based firms poured into AI.