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Nvidia stock plummets lose a record $589 billion as DeepSeek prompts questions over AI spending.
The (NVDA) stock dropped nearly 17% Monday, leading a sell-off across chip stocks and the broader market after a new AI model from China’s DeepSeek raised questions about AI investment and the rise of more cost-efficient artificial intelligence agents.
Nvidia stock plummets due to DeepSeek
Chinese startup DeepSeek released a new AI model on Jan. 20 viewed as a threat to OpenAI. American venture capitalist Marc Andreessen called the model “one of the most amazing and impressive breakthroughs I’ve ever seen.”
The news came just a month after DeepSeek said one of its latest AI models cost just $5.6 million to train. OpenAI’s GPT-4 model cost more than $100 million to train.
The announcements spurred fears that AI models may begin to require fewer chips and energy than they currently use.
“If DeepSeek’s innovations are adopted broadly, an argument can be made that model training costs could come down significantly.
Even at U.S. hyperscalers, potentially raising questions about the need for 1-million XPU/GPU clusters as projected by some,” wrote Raymond James semiconductor analyst Srini Pajjuri in a note to investors Sunday evening.
Chip stocks also dropped across the board premarket Monday, with Broadcom (AVGO) down over 17%, Micron (MU) off almost 12%, and Advanced Micro Devices (AMD) down more than 6%.
