Nvidia, the leading AI chipmaker, faces a historic market value decline after a Chinese AI competitor challenges its dominance. Investors question inflated valuations of major tech companies as the cost-effective chatbot gains popularity.
Nvidia , the leading AI chipmaker, experienced a staggering $600 billion decline in its market value , marking the largest drop in US stock market history. This dramatic plunge was triggered by the emergence of a cost-effective AI competitor from China , which has chipped away at several prominent tech firms.
Nvidia, Meta Platforms, Microsoft, and Alphabet all witnessed their stock values come under pressure as investors questioned whether their share prices, already considered inflated following a two-year AI-driven frenzy, were justified. Market analysts estimate that the combined losses in market value across US tech companies have exceeded $1 trillion.Nvidia's shares plummeted by 11% at the opening bell on Wall Street but subsequently slid as low as 17% during afternoon trading. Meanwhile, the technology-focused Nasdaq index experienced a decline of over 3%. The widespread sell-off was attributed to the introduction late last week of a Chinese AI chatbot that utilizes less expensive chips. This chatbot has rapidly gained traction, becoming the most popular free application on Apple's App Store across the United States.The market reaction intensified despite revelations that DeepSeek, the startup behind the AI chatbot, was restricting new registrations due to a cyberattack and overwhelming demand. Brian Jacobsen, chief economist at Annex Wealth Management, stated that DeepSeek's cost claims have cast doubt on the market's reliance on AI dominance witnessed over the past two years, during which AI-related stocks repeatedly reached new highs. He elaborated on the potential implications: 'It could mean less demand for chips, less need for a massive build-out of power production to fuel the models, and less need for large-scale data centers. However, it could also mean that AI becomes more accessible and help kickstart the development of a wide array of useful applications.'DeepSeek's AI assistant has undeniably proven popular, surpassing ChatGPT on the App Store. Its performance has even garnered praise from US rivals, although questions persist regarding the 2023-founded company's technological advancements. This success was achieved despite US tech export controls, implemented by President Joe Biden in 2021 to protect American patents, aimed at limiting China's access to Western technology.Nvidia responded to the sell-off in its shares with a statement emphasizing that DeepSeek's progress underscores the significance of its chips in the Chinese market and argued that increased demand for DeepSeek's services will necessitate further adoption of its chips. These market movements are likely to raise concerns for Biden's successor, Donald Trump, who has long accused Chinese firms of profiting from US technology. It remains unclear whether he will view this competition as detrimental to American companies, considering his previous indication of permitting Chinese-owned TikTok to evade a US ban through shared ownership to mitigate national security concerns
AI Nvidia China Market Value Stock Decline Tech Competition Deepseek Chatgpt US-China Relations
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