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Why Nvidia Stock Suffered the Largest Ever Single-Day Loss in History

Monday’s tech sector sell-off was fueled by the release of China’s groundbreaking AI startup DeepSeek, which was developed at a fraction of the cost of comparable US AI models. The news caused Nvidia’s market cap to plummet by nearly $600 billion, marking the biggest single-day loss for a stock in US history.

Nvidia (NASDAQ: NVDA), a name synonymous with artificial intelligence (AI) and cutting-edge computing, made history on Monday—but not for the reasons shareholders had hoped. The semiconductor giant experienced a jaw-dropping 17% plunge in its stock price, erasing nearly $600 billion from its market capitalization. This marks the largest single-day loss for any company in US history, eclipsing Nvidia’s own prior record of $279 billion set last September.

The sell-off, which reverberated across the tech sector, followed news that Chinese AI startup DeepSeek unveiled a groundbreaking large language model (LLM) rivaling US offerings, developed at a fraction of the typical cost. DeepSeek’s model, reportedly trained with downgraded Nvidia H800 chips and costing under $6 million, has sparked fears of diminishing demand for Nvidia’s high-end GPUs, which dominate the AI data center market.


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Historic Loss Stuns Investors

Nvidia’s shares tumbled to $118.58, their steepest single-day decline since March 2020. The stock’s fall not only wiped out billions in market value but also stripped Nvidia of its crown as the most valuable publicly traded company, a title it briefly held after surpassing Apple (NASDAQ: AAPL) last week. Nvidia now sits as the third most valuable company, behind Apple and Microsoft (NASDAQ: MSFT).

The broader tech-heavy NASDAQ also felt the heat, falling 3.1%, with other AI-reliant firms such as Broadcom (NASDAQ: AVGO), Oracle (NYSE: ORCL), and Super Micro Computer (NASDAQ: SMCI) suffering losses of 10% or more.

DeepSeek Sparks Tech Sector Anxiety

DeepSeek’s disruptive debut has sparked alarm in US markets. The Chinese startup claims its open-source AI model rivals leading platforms like OpenAI’s ChatGPT and Meta’s (NASDAQ: META) LLaMA 3.1 but at a fraction of the development cost.

In a post on X, venture capitalist David Sacks stated:

This development has stoked fears among investors about the sustainability of Nvidia’s meteoric rise. Nvidia’s GPUs, which power AI systems for companies like Alphabet (NASDAQ: GOOGL), Meta, and Amazon (NASDAQ: AMZN), have long been considered indispensable for cutting-edge AI applications. However, DeepSeek’s ability to produce competitive results using older hardware challenges that assumption.

Ed Yardeni of Yardeni Research, in a note to investors, wrote:

“[If big US tech companies] can learn from DeepSeek to design AI systems with cheaper GPUs…it might not be a happy development for Nvidia.”


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Market Reaction and Analyst Perspectives

The fallout from DeepSeek’s announcement triggered a wave of sell-offs, with Advanced Micro Devices (NASDAQ: AMD) dropping 6.4% and Arm Holdings (NASDAQ: ARM) declining 10%. Even Broadcom, a significant player in the AI chip market, fell 17%, wiping out $200 billion in market value.

Despite the downturn, some analysts remain optimistic about Nvidia’s long-term prospects. Analyst Stacy Rasgon of Bernstein, who reiterated his buy ratings on Nvidia and Broadcom, noted that the DeepSeek-induced panic “seems overblown,” pointing to ongoing investment in AI infrastructure.

In a note to clients on Monday, Rasgon commented:

“The resulting Twitterverse panic over the weekend seems overblown. According to the many (occasionally hysterical) hot takes we saw, the implications range anywhere from ‘That’s really interesting’ to ‘This is the death knell of the AI infrastructure complex as we know it.’ Investments are still accelerating,” he said. “Right on top of all the DeepSeek news flow last week we got Meta substantially increasing their capex for the year. We got the Stargate announcement. And China announced a trillion yuan (about $140 billion) AI spending plan. We are still going to need and get a lot of chips.”

President Trump also chimed in on the conversation, stating:

“The release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we should be laser focused on competing to win. We have the best scientists in the world. This is very unusual. We always have the ideas. We’re always first.”

Moreover, major US tech companies continue to expand their AI budgets. Meta recently announced a significant increase in capital expenditures for the year, while the Stargate initiative plans to spend $500 billion on AI infrastructure over the next four years.

A Setback, Not a Death Knell

While Nvidia’s CEO Jensen Huang saw his net worth plummet by $21 billion due to Monday’s rout, the company’s position as a leader in AI innovation remains largely intact. Huang has previously expressed confidence in Nvidia’s ability to shape the future of AI.

In a note to investors on Monday, Wedbush Securities analyst Daniel Ives maintained a “Buy” rating on NVDA stock, while also writing:

“At the end of the day, there is only one chip company in the world launching autonomous, robotics, and broader AI use cases, and that is Nvidia. Launching a competitive LLM (large language model) for consumer use cases is one thing … launching broader AI infrastructure is a whole other ballgame and nothing with DeepSeek makes us believe anything different.”

As Nvidia faces this unprecedented challenge, its leadership will likely seek to reinforce the value of its cutting-edge GPUs and diversified portfolio, which includes robotics and AI-as-a-service offerings.

Wider Implications for the Tech Sector

The seismic impact of Nvidia’s sell-off underscores the volatility of the burgeoning AI industry. Analysts warn that the current market correction could signal a period of heightened scrutiny for companies heavily invested in AI. However, they also emphasize that innovation and demand in the sector remain robust.

For now, the story of Nvidia’s historic loss is a cautionary tale of how quickly fortunes can shift in the fast-moving world of AI and technology. Whether this marks a temporary setback or a more significant turning point for the company and the sector as a whole remains to be seen.


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Disclaimer: Wealthy VC does not hold a position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.

Ryan Troup

Ryan Troup is the Editor in Chief of Wealthy VC. Ryan has 15+ years of investing experience. X | Email

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