Investors worldwide initiated a widespread selloff in technology stocks on Monday, resulting in a remarkable $593 billion loss in market value for Nvidia marking the largest one-day loss for any company on Wall Street. DeepSeek launched its free application on January 10, utilizing the DeepSeek-V3 model, which its researchers claim competes with the leading AI systems globally, needing less than $6 million for training. The rapid rise of a significant player like DeepSeek is particularly concerning in light of the Trump administration’s recent pledge to invest $500 billion in U.S. data centers.
Global investors experienced a significant selloff in technology stocks on Monday, resulting in an astounding $593 billion loss in market value for chipmaker Nvidia (NVDA) the largest single-day loss for any firm on Wall Street. This decline followed the announcement by Chinese startup DeepSeek of a low-cost AI assistant that quickly rose to the top of Apple’s App Store in the U.S. The Nasdaq (.IXIC) fell by 3.1% that day, reflecting growing worries that DeepSeek’s new product could challenge the dominance of existing AI leaders by offering lower prices and reduced data usage.
DeepSeek’s free application, launched on January 10, utilizes the DeepSeek-V3 model, which the company’s researchers claim rivals the world’s most advanced AI systems while requiring under $6 million for training. This significantly lower cost, supported by Nvidia’s H800 chips reportedly less powerful than the company’s flagship models has reignited discussions about Washington’s export controls designed to limit high-end chip shipments to China. Peter Schiff, commenting on X, argued that DeepSeek’s advancement “is yet another example of how government regulations backfire,” highlighting doubts about the effectiveness of U.S. tech-export policies.
The tech and energy sectors faced significant losses on Monday.
The impact extended well beyond Nvidia, whose shares dropped nearly 17%. Chipmaker Broadcom (AVGO) fell by 17.4%, while other major AI supporters like Microsoft (MSFT) and Alphabet (GOOG) also experienced considerable declines. Additionally, power utilities once optimistic about a surge in demand from data center growth saw heavy sell-offs, with Vistra (VST) and Constellation Energy (CEG) retreating sharply. Concerns arose that a more efficient AI model, usable on everyday devices rather than large data centers, could undermine the capital-intensive investments that have driven sector growth and stock valuations over the past two years.
In reaction to the tech downturn, many investors turned to safe-haven government bonds and more stable currencies, indicating increasing apprehension about assets perceived as susceptible to sudden technological disruptions. While some market observers consider Monday’s selloff an overreaction especially those who believe the industry will continue to depend on chip supply for data centers others view DeepSeek’s free, open-source model as a potential game-changer. Executives in Silicon Valley have lauded the new technology’s speed and cost-effectiveness, likening its impact to historical “Sputnik moments” that catalyzed significant industry transformations.
The rapid rise of a significant player like DeepSeek is particularly concerning in light of the Trump administration’s recent commitment to invest $500 billion in U.S. data centers. In a rapidly evolving field like AI, efforts to restrict or encourage development may lead to unintended consequences for both tech giants taken by surprise and the global community navigating the future of artificial intelligence.
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