Nvidia sheds almost $600 billion in market cap, biggest one-day loss in U.S. history
Nvidia lost close to $600 billion in market cap on Monday, the biggest drop for any company on a single day in U.S. history.
The chipmaker's stock price plummeted 17% to close at $118.58. It was Nvidia's worst day on the market since March 16, 2020, which was early in the Covid pandemic. After Nvidia surpassed Apple last week to become the most valuable publicly traded company, the stock's drop Monday led a 3.1% slide in the tech-heavy Nasdaq.
The sell-off was sparked by concerns that Chinese artificial intelligence lab DeepSeek is presenting increased competition in the global AI battle. In late December, DeepSeek unveiled a free, open-source large language model that it said took only two months and less than $6 million to build, using reduced-capability chips from Nvidia called H800s.
Nvidia's graphics processing units, or GPUs, dominate the market for AI data center chips in the U.S., with tech giants such as Alphabet, Meta and Amazon spending billions of dollars on the processors to train and run their AI models.
Analysts at Cantor wrote in a report Monday that the release of DeepSeek's latest technology has caused "great angst as to the impact for compute demand, and therefore, fears of peak spending on GPUs."
The analysts said they "think this view is farthest from the truth" and that advancements in AI will most likely lead to "the AI industry wanting more compute, not less." They recommend buying Nvidia shares.
But after Nvidia's huge run-up — the stock soared 239% in 2023 and 171% in 2024 — the market is on edge about any possible pullback in spending. Broadcom, the other big U.S. chipmaker to see giant valuation gains from AI, fell 17% on Monday, pulling its market cap down by $200 billion.
Data center companies