28-1-2025 (NEW YORK) In a seismic shift that sent tremors through Wall Street, US technology stocks suffered a dramatic selloff on Monday, with chip giant Nvidia witnessing an unprecedented $600 billion erasure in market value following an unexpected advancement from Chinese artificial intelligence startup DeepSeek.
The year-old Chinese firm unveiled its R1 model, a ChatGPT-style AI system that reportedly achieves comparable capabilities to its American counterparts at a fraction of the cost. DeepSeek claims to have developed the system for merely $5.6 million in computing expenses, a figure that stands in stark contrast to the billions typically invested by US tech giants.
The revelation triggered a massive market upheaval, with the tech-heavy Nasdaq plummeting 3.1% whilst the broader S&P 500 declined 1.5%. The Dow Jones Industrial Average, bolstered by healthcare and consumer sectors less exposed to AI disruption, managed to buck the trend, climbing 0.7%.
Nvidia, which began the day as the world’s most valuable publicly traded company with a market capitalisation exceeding $3.4 trillion, saw its shares plunge nearly 17%, marking the largest single-day market value loss in history. The chip manufacturer’s dramatic fall relegated it to third place behind Apple and Microsoft.
The ripple effects extended beyond pure technology players, with energy companies heavily invested in AI infrastructure suffering significant losses. Constellation Energy, which had planned to revive the Three Mile Island nuclear plant for AI operations, saw its shares tumble 21%.
What makes DeepSeek’s achievement particularly remarkable is its success despite US restrictions on high-power AI chip exports to China. Tech investor Marc Andreessen described it as “one of the most amazing and impressive breakthroughs I’ve ever seen” on social media platform X.
Market analysts, however, urge caution in interpreting the selloff. “Time will tell if the DeepSeek threat is real,” noted Michael Block of Third Seven Capital. “Markets had grown perhaps too complacent and may have been seeking an excuse for a pullback.”
The development raises questions about America’s perceived technological supremacy, particularly as Meta recently announced plans to invest $65 billion in AI development this year alone. However, industry experts maintain that the US’s deep talent pool and capital base continue to position it favourably in the race for advanced AI capabilities.
Giuseppe Sette, president of AI research firm Reflexivity, emphasised that despite this breakthrough, “the US remains the most promising ‘home turf’ from which we expect to see the emergence of the first self-improving AI.”
