Tech Shares Feel The Tremors Of Chinese AI Model DeepSeek, Nvidia Stocks Crash 17 Per Cent

Nvidia, considered to be the face behind the AI boom in recent years, saw a wipeout of $593 billion from its market capitalisation, clocking a record one-day loss for any firm.

The bloodbath in the tech stocks began after a free AI assistant was launched by Chinese start-up DeepSeek last week, which the firm said used less data at a mere fraction of the cost incurred by the available services

Source : DeepSeek

Tech shares across the world suffered a massive hit following the emergence of the Chinese artificial intelligence model, DeepSeek. The Japanese technology shares nosedived on Tuesday after concerns emerged about the efficiency of the Chinese chatbot and the low-cost associated with developing the model.

Investors questioned the record high valuations and dominance of artificial intelligence players in the Western markets. Tech giant, Nvidia, saw a bloodbath in the US markets as it crashed 17 per cent on Monday, reported Reuters. The company considered to be the face behind the AI boom in recent years saw a wipeout of $593 billion from its market capitalisation, clocking a record one-day loss for any firm.

Nvidia was overtaken by Apple as the most valuable listed company in the US after the shares crashed. Meanwhile, Microsoft witnessed a wipeout of $7 billion and Google's parent entity saw its capital valuation erode by $100 billion. The fall in Nvidia stocks was reportedly the biggest seen in the US stock market's history.

The bloodbath in the tech stocks began after a free AI assistant was launched by Chinese start-up DeepSeek last week, which the firm said used less data at a mere fraction of the cost incurred by the available services. This attracted the attention of users across the world, with OpenAI CEO Sam Altman calling it ‘an impressive model’.

The benchmark US tech-heavy index, Nasdaq Composite, crashed 3.1 per cent, resulting in wiping off more than $1 trillion off the index. The wipeout was a result of investors questioning the dominance of the Western AI models in the face of a much more economical competitor from China.

The Hangzhou start-up is behind DeepSeek, whose controlling shareholder is Liang Wenfeng, who is also the co-founder of quantitative hedge fund High-Flyer, the news agency reported citing records.