Nvidia Shares Drop 13.5% in Premarket, Erasing $420 Billion in Market Cap Due to DeepSeek AI

Jan 27, 2025, 10:24 AM

Nvidia Corp. experienced a significant decline in its stock price during premarket trading, falling as much as 13.5% due to concerns over the impact of China's DeepSeek AI startup. DeepSeek, which launched a free, open-source large-language model developed in just two months at a cost under $6 million, has sparked worries about the competitiveness of U.S. tech companies in the AI sector. The drop in Nvidia's shares led to a loss of over $420 billion in market capitalization, marking the largest single-day value loss of any company in history. This sell-off was not isolated to Nvidia, as other tech giants like Microsoft, Meta, and Tesla also saw their stock prices decline in premarket trading. The emergence of DeepSeek has raised questions about the efficiency and cost-effectiveness of AI development, challenging the dominance of U.S. firms in the industry.