Nvidia’s Stock Price Crashes: $600 Billion Valuation Plunge Sets New Record
Nvidia’s Share Price Plummets: The Biggest Single-Day Loss in History
In a shocking turn of events, Nvidia’s market value has suffered the biggest single-day loss in history, dropping by over $600 billion, according to a report by Forbes. This sudden decline is largely attributed to the release of an open-source AI model called R1 by China-based DeepSeek, which has reportedly displayed capabilities comparable to more well-known names like OpenAI, but at a tiny fraction of the cost.
R1: A Game-Changer in AI
DeepSeek claims it was able to achieve its remarkable results for less than $5.6 million, attributed to "our optimized co-design of algorithms, frameworks, and hardware." This is a significant concern for Nvidia, as while DeepSeek is still using Nvidia hardware to power its AI, the fact that it seemingly can do so much with so little naturally implies that other companies can do the same. If they all figure out the secret, it could drive a stake through the heart of demand for high-end (and extremely expensive) Nvidia GPUs that’s propelled the company’s share price over the past few years.
Consequences for Tech Stocks
This news has sent shockwaves throughout the tech industry, with other companies like Constellation Energy and Microsoft also taking a hit. The total valuation loss across US and European tech companies is set to exceed $1 trillion. As noted by the Canadian Press, Constellation Energy, which is planning to restart the Three Mile Island nuclear power plant to power Microsoft’s cloud and AI data centers, also got hammered in the fall, losing more than 20% of its value over the past few days.
DeepSeek’s Costs: A Hidden Reality?
While DeepSeek may be grossly underreporting the real costs of R1 development, one researcher quoted by Motley Fool said DeepSeek is probably spending closer to $500 million – $1 billion per year on the project. This still puts it at a significant cost advantage over US-based AI companies. In a recent CNBC interview, Scale AI CEO Alexander Wang said his "understanding" is that DeepSeek actually has access to about 50,000 Nvidia A100 Tensor Core GPUs, which it doesn’t talk about because US export controls means it’s not supposed to have them.
The Real Deal?
Others, however, think it’s the real deal. Tech writer Anil Dash, for one, wrote on Bluesky that even if R1’s gains in efficiency and cost reduction are overstated, they still represent a "huge leap" over OpenAI and other models.
Nvidia’s Resilience
Despite this shocking decline, Nvidia’s share price is still astronomically higher than it was just a few years ago. This could be attributed to the company’s strong financials and continued dominance in the AI and gaming industries.
[Image: Nvidia share price as of January 27, 2025]
