After DeepSeek unveiled its “affordable AI,” Nvidia’s market capitalization plummeted by nearly $600 billion, while Meta set up a “war room” to decode the game-changing AI model from China.
AI had propelled Nvidia to become one of the two most valuable companies in the world, with a market cap exceeding $3.5 trillion. However, according to Fortune, on January 27, “Nvidia investors’ panic” led to a nearly 17% drop in the company’s stock, wiping out almost $600 billion in value and bringing its market cap below the $3 trillion mark.
The sell-off was triggered by DeepSeek. On January 20, the Chinese startup announced its free AI model, V3, and particularly the R1 version, which was “trained on Nvidia’s older chips, 100% open-source, and 96.4% cheaper than OpenAI’s O1 while delivering comparable performance.” The company revealed that it took just two months and under $6 million to develop this AI model, utilizing Nvidia’s less advanced H800 chips. Notably, the V3 version even surpassed ChatGPT to become the most downloaded app on the U.S. App Store on January 27.
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