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Artificial intelligence stocks got a major shake-up when Nvidia (NVDA), the leader in AI chips, notched their largest single-day plunge since 2020. On Jan. 27, Nvidia shares dropped by 17%, wiping out an astonishing $589 billion from Nvidia’s market capitalization.
This sharp decline came after Chinese AI startup DeepSeek announced its R1 model, which reportedly matches the performance of top U.S. AI models while using far fewer chips. DeepSeek claimed it developed the model for just $5.6 million — a fraction of the hundreds of billions U.S. tech giants typically spend on AI infrastructure.