DeepSeek fear could wipe off over $400 billion in Nvidia’s m-cap as stock tanks 12% in pre-market trading
27 January 2025
US technology stocks fell after Chinese AI startup DeepSeek raised concerns about American industry leadership. Nvidia shares dropped over 12%, potentially erasing $432 billion from its market cap. Other chipmakers like ASML also declined.
US technology stocks fell on Monday after Chinese AI startup DeepSeek raised doubts about America's leadership in the industry. This led to a drop in shares of several chipmakers, with Nvidia, one of the world’s most valuable companies, falling more than 12% in pre-market trading.
As of 6:27:29 AM EST, Nvidia shares were trading 12% lower at $125.05 in the pre-market trading as against its previous close of $142.62. If the fall sustains when the market opens for normal trading, it could result in a $432 billion erosion from Nvidia's market capitalisation. In Frankfurt, Nvidia stock traded lower by 12.53%.
Apart from Nvidia, Netherlands-based chip companies ASML and ASM International dropped between 10-14% in European trading.
Nvidia, which designs semiconductors for AI, and ASML, which manufactures machines to produce high-end chips, have both benefited from the boom in AI spending.
But the latest AI model DeepSeek, released last week, is being viewed as a strong competitor to those from OpenAI and Meta Platforms Inc as it is cheaper to run and works on less advanced chips. Reportedly, the DeepSeek-V3 model was developed by spending $5.6 million, significantly lower than the amounts used by the American tech giants. The open-sourced product has moved to the top in Apple Inc.'s App Store rankings, according to a Reuters report.
US Stocks Crash
Major tech companies such as Microsoft and Meta Platforms also faced a downfall, shedding over 3% each. Meanwhile, Google's parent firm Alphabet lost 3% and Apple 1.5%. Microsoft, Meta and Apple are slated to post their quarterly earnings this week.
Meanwhile, US stock futures signalled at a gap-down start for Wall Street, with Dow E-minis and S&P 500 E-minis declining nearly 2% and the tech-heavy Nasdaq 100 E-minis crashing over 3%.
(With inputs from agencies)
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First Published:27 Jan 2025, 04:56 PM IST
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