Tue Jan 28 22:38:07 UTC 2025: ## China’s DeepSeek Triggers Record-Breaking Stock Market Volatility
**New York, NY** – The release of a cost-effective artificial intelligence model by China’s DeepSeek sent shockwaves through the US stock market on Monday, triggering a massive selloff that saw Nvidia, the world’s leading AI chipmaker, lose a record-breaking $589 billion in market capitalization. The unprecedented drop was described by some analysts as “excessive” and attributed partly to geopolitical concerns.
Nvidia’s shares plummeted 17%, the largest single-day loss in market value for any public company in history. Other tech giants, including Oracle, Broadcom, and Taiwan Semiconductor Manufacturing Company, also suffered significant losses. The tech-heavy Nasdaq index plunged over 3%, its worst day since December 2024. Billionaire investors, including Larry Ellison (Oracle) and Jensen Huang (Nvidia), saw their net worths decline by tens of billions of dollars.
The sell-off stemmed from concerns that DeepSeek’s R1 model, a generative AI comparable to OpenAI’s offerings but significantly cheaper to develop, could disrupt the US-dominated AI landscape. The model’s relatively low cost ($5.6 million claimed by DeepSeek, though disputed by some analysts) raised questions about the sustainability of current AI investment valuations, prompting fears of a potential “AI investment bubble.”
However, the market experienced a dramatic rebound on Tuesday. Nvidia’s stock soared by 8.8%, recovering 44% of its Monday losses and adding $260 billion to its market capitalization – a figure exceeding the combined valuations of American Express, Disney, and Goldman Sachs. This represented the second-largest single-day market value gain in history for any stock.
Apple, meanwhile, emerged as a relative winner amid the turmoil. Its shares rallied strongly, gaining approximately 4% on Tuesday, fueled by analysts’ assessment that Apple’s more measured approach to generative AI makes it less vulnerable to the competitive pressures posed by DeepSeek.
Despite the Tuesday surge, analyst sentiment remained mixed. While some analysts downplayed the immediate threat from DeepSeek, others expressed concern about the potential for further export controls or reduced investor enthusiasm. Morgan Stanley, for example, lowered its price target for Nvidia while maintaining a “buy” rating.
The DeepSeek model has been praised by figures including OpenAI CEO Sam Altman and even former President Donald Trump, who viewed it as a wake-up call for US industries to accelerate their AI development and reduce costs. China’s state-run media also hailed DeepSeek’s success as evidence of China’s ability to innovate despite US sanctions.
The DeepSeek launch has sparked debate about the future of the AI race, with some comparing it to the Sputnik moment that propelled the US space race. The event underscores the growing geopolitical implications of AI development and the potential for rapid shifts in market sentiment in response to technological advancements. The coming week will see further market volatility as major tech companies release their fourth-quarter earnings reports.
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