In a significant upheaval within the tech industry, Nvidia Corporation, renowned for its AI hardware, faced an unprecedented market valuation decline. On January 27, 2025, Nvidia’s shares plunged nearly 17%, resulting in a loss of approximately $593 billion—the largest single-day market value drop ever recorded.
This dramatic downturn was precipitated by the emergence of DeepSeek, a Chinese AI startup co-founded by Liang Wenfeng. DeepSeek is an artificial intelligence research lab based in Hangzhou, China. Its AI model DeepSeek-R1, which was released in early January, has topped the iPhone download chart in the US, leaving behind the industry giant OpenAI’s ChatGPT. the company claims to have achieved this without relying on Nvidia’s high-end semiconductors, which have been central to many AI advancements to date.
DeepSeek in New York, United States:
US chip-maker Nvidia led a rout in tech stocks Monday after the emergence of a low-cost Chinese generative AI model that could threaten American dominance in the fast-growing industry.
The chatbot developed by DeepSeek, a startup based in the eastern Chinese city of Hangzhou, has apparently shown the ability to match the capacity of US AI pace-setters for a fraction of the investments made by American companies
dominance in AI technology and the potential overvaluation of companies heavily invested in AI infrastructure. Major tech firms, including Microsoft, Alphabet (Google), and Tesla, also faced significant stock declines, contributing to a cumulative loss of around $1 trillion in market value across the sector.
Liang Wenfeng, who studied electronics and computer vision at Zhejiang University, founded High-Flyer Quant in 2015, which later established its AI division, DeepSeek. The company’s rapid ascent and innovative approach have drawn comparisons to tech-finance visionaries like Jeff Bezos and David Siegel, highlighting the lucrative potential of integrating AI with quantitative trading strategies.
While some analysts caution that the market’s reaction may be overblown, the event underscores the volatile nature of the tech industry, As the AI landscape continues to evolve, companies must remain agile and forward-thinking to maintain their competitive edge.
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