Nvidia Loses Nearly $600 Billion in One Day – Biggest Drop in U.S. History
On Monday, Nvidia’s stock price fell sharply, dropping 17% in a single day. This caused the company’s market value to shrink by nearly $600 billion, marking the biggest one-day loss for any U.S. company in history.
What Caused This Huge Drop?
The main reason for this sell-off was growing concerns about competition in the artificial intelligence (AI) industry. A Chinese AI company called DeepSeek recently introduced a new, low-cost AI model that runs on Nvidia’s own chips. This raised fears that AI companies might spend less money on Nvidia’s powerful processors in the future.
Investors reacted quickly to this news, selling off Nvidia shares in large numbers. As a result, the tech-heavy Nasdaq stock index also fell by 3.1%. Other major tech companies that rely on Nvidia’s chips, such as Dell, Oracle, and Super Micro Computer, also saw their stock prices decline by at least 8.7%.
How Important is Nvidia in the AI World?
Nvidia dominates the AI chip market. Companies like Google (Alphabet), Meta (Facebook’s parent company), and Amazon spend billions on Nvidia’s GPUs (graphics processing units) to power their AI systems. Because of this, Nvidia’s stock had been rising rapidly. In fact, just last week, it became the most valuable public company in the U.S., surpassing Apple. However, Monday’s sharp drop pushed Nvidia back to the third spot, behind Apple and Microsoft.
Should Investors Be Worried?
Some experts believe this panic may be overblown. Analysts at investment firm Cantor say that AI technology is still growing, and companies will likely spend even more on powerful chips in the future, not less. They even recommend buying Nvidia shares now, expecting the company to bounce back.
However, others caution that Nvidia’s stock price had already increased by an incredible 239% in 2023 and another 171% in 2024 before this drop. Some investors fear the market may be adjusting to more realistic expectations.
Impact Beyond Nvidia
Nvidia wasn’t the only company affected by the sell-off. Broadcom, another major chipmaker that has benefited from AI growth, also lost 17% of its stock value, wiping out $200 billion in market capitalization. Additionally, companies that rely on Nvidia’s chips to sell hardware, such as Dell, Hewlett Packard Enterprise, and Super Micro Computer, also suffered losses of at least 5.8%. Oracle’s stock plunged 14%.
CEO’s Fortune Takes a Hit
Nvidia’s CEO, Jensen Huang, also saw his personal wealth decline. His net worth dropped by about $21 billion in a single day, pushing him down to 17th place on Forbes’ list of the world’s richest people.
The Role of DeepSeek
One of the biggest reasons for the sell-off was DeepSeek’s sudden rise. Over the weekend, its AI app became the most downloaded free app on Apple’s App Store in the U.S., even surpassing OpenAI’s ChatGPT. This happened despite restrictions on U.S. chip exports to China, showing that Chinese AI companies are advancing quickly.
What’s Next for Nvidia?
While some investors rushed to buy Nvidia shares at the lower price, experts warn that the stock could drop further. Some experts advised investors to be cautious and should be very careful about assuming that this is the bottom.
For now, Nvidia remains a key player in the AI industry, but investors are keeping a close eye on how competition and spending trends develop in the coming months.