On January 27, Nvidia fell over 17%, amounting to a $600 billion loss in market cap and resulting in the largest single-day drop in US stock market history according to the CNBC headline on that day. On a day where well over half of US equities were positive, Nvidia and many other AI related stocks were in free fall over fears of a cheap competitor in China. The company, DeepSeek, released an app in US markets which had already reached the top of Apple Store’s downloads and added a new level of uncertainty to a future driven market segment.
DeepSeek is claiming it was built at a fraction of the cost of the current industry-leading models, leading to a bit of panic amongst US companies and investors alike. These claims, however, have yet to be substantiated and there is hardly enough evidence of this new competitor causing any major shift in the AI space.
For some context in that 17% drop in Nvidia, as of January 24th, the stock was up roughly 125% on a 12-month time frame. The point is, sometimes all it takes is one small and unsubstantiated event to either spook investors, or simply give them a good excuse to take some profits close to the highs. The rest of the market shook off this huge move in one of the world’s biggest stocks as if it wasn’t even happening. Investors should remember this event and take note that even the strongest stocks can sell off once in a while.
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