TLDR:
- Nvidia stock dropped 17% on Monday, its worst day since March 2020, wiping out $589 billion in market value – the largest single-day loss for any company in history
- The drop was triggered by Chinese startup DeepSeek’s release of R1, an AI model rivaling U.S. tech giants while using fewer chips
- DeepSeek claimed it spent only $5.6 million on Nvidia GPUs to develop its model, challenging assumptions about necessary AI infrastructure costs
- Nvidia fell from its position as world’s most valuable company, with market cap dropping from $3.5T to $2.9T
- CEO Jensen Huang’s net worth decreased by $21 billion to $103.1 billion
The stock market witnessed a historic moment on Monday as Nvidia, the semiconductor giant that has been at the forefront of the artificial intelligence boom, experienced its steepest single-day decline since March 2020. The company’s shares tumbled 17%, erasing an unprecedented $589 billion in market value.
The catalyst for this dramatic fall came from an unexpected source: a Chinese startup called DeepSeek. The company recently unveiled its R1 artificial intelligence model, which appears to match the capabilities of leading U.S. AI systems while requiring significantly fewer computing resources.

DeepSeek’s announcement that it developed its AI model using just $5.6 million worth of Nvidia’s graphics processing units (GPUs) sent shockwaves through Wall Street. While experts question this figure’s accuracy, the claim has sparked debate about the necessity of massive AI infrastructure investments.
The market reaction was swift and severe. Nvidia’s market capitalization plummeted from $3.5 trillion to $2.9 trillion, causing it to lose its position as the world’s most valuable company. This decline surpassed the previous record for single-day market value loss, which was also held by Nvidia from September 2024.
The ripple effects were felt across the technology sector. The tech-heavy Nasdaq index fell 3.1%, while the broader S&P 500 declined 1.5%. Other companies in the AI ecosystem, including Arm, Broadcom, and Oracle, saw their shares drop by more than 10%.
Nvidia responded to the situation with a measured statement, describing DeepSeek’s model as an “excellent AI advancement” that remains “fully export control compliant.” The company emphasized that the model still requires “significant numbers” of Nvidia GPUs.
Wall Street analysts offered mixed perspectives on the development. Citi analysts maintained their “buy” rating on Nvidia stock, expressing skepticism about DeepSeek’s claims regarding chip usage. However, Jefferies analysts suggested that DeepSeek’s success might lead Silicon Valley companies to prioritize efficiency in their AI investments starting in 2026.
The impact extended beyond just Nvidia’s corporate valuation. CEO Jensen Huang, who holds a 3% stake in the company, saw his personal net worth decrease by $21 billion, falling to $103.1 billion according to Forbes estimates.
For context, Nvidia’s remarkable rise has been fueled by surging demand for its GPUs, which can cost up to $25,000 each. The company’s net profits grew from $4.8 billion in 2022 to an estimated $66.7 billion in 2024, driven largely by purchases from major tech companies like Meta, Tesla, and OpenAI.
The magnitude of Monday’s market value loss puts it in perspective: the $589 billion decline exceeds the total market value of major corporations like UnitedHealth, Exxon Mobil, and Costco.
Other AI-adjacent sectors were not spared from the sell-off. Nuclear power providers Vistra and Constellation Energy Corporation experienced steep declines of 28% and 21% respectively.
The day’s events represented the largest one-day drop in Nvidia’s stock since the Covid-19 market crash in March 2020. Trading volume was notably high as investors reassessed their positions in light of the DeepSeek news.
Monday’s market activity highlighted the volatile nature of technology stocks, particularly those tied to the AI sector. The trading session ended with Nvidia’s stock price settling below key technical levels watched by market participants.
DeepSeek’s breakthrough has raised questions about the future trajectory of AI infrastructure spending, as companies may begin exploring more cost-efficient approaches to AI development.
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