Nvidia stock plummets by 17 percent

(MENAFN) Nvidia's stock plummeted by 17% on Monday, resulting in a massive loss of about $589 billion in market value, the largest one-day drop in US corporate history. This sharp decline was driven by concerns over competition from the Chinese AI company DeepSeek, which launched an open-source AI model that raised doubts about the future demand for Nvidia’s chips. The selloff affected the broader tech sector, with the nasdaq Composite falling 3.1%.

Nvidia’s stock ended the day at $118.58, its biggest drop since March 2020. As a result, Nvidia was overtaken by Apple and Microsoft in market value, dropping to third place at $2.9 trillion. DeepSeek’s R1 model, developed with a fraction of the cost and time spent by US companies like OpenAI, has raised questions about the long-term sustainability of Nvidia’s dominance in the AI chip market.

Although Nvidia acknowledged DeepSeek's advancements, the company remains optimistic about its chip demand, claiming that high-performance GPUs will continue to be essential for AI tasks. The market downturn also impacted other semiconductor companies, including Broadcom, Oracle, and Dell, as well as prominent figures like Oracle’s Larry Ellison and Nvidia CEO Jensen Huang, who saw their net worths plummet. This situation highlights the intensifying competition in the US-China AI race and the need for continued innovation in the sector.

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