The Nasdaq 100 index experienced a decline of over 3%, and Nvidia was poised to register the largest market capitalization loss for a single stock in market history. Stock markets that are near historic highs are always unstable, and high valuations make the margin for error even smaller.
The momentum in major stock indices had already extended, and sentiment was taking on a more optimistic tone as many investors followed the recent rally after a weak start to the year. Nvidia, the largest supplier of chips used to train artificial intelligence software, praised a new model launched by the Chinese startup DeepSeek as an "excellent breakthrough in artificial intelligence" that complies with U.S. technology export controls.
The company stated that DeepSeek's work in creating new models demonstrates how widely available models and computing can be leveraged while fully complying with export regulations. It was emphasized that the Chinese company did not violate U.S. restrictions that limit access to advanced chips in the development of its technology.
Nvidia's stock fell sharply after increasing its value fivefold in the last two years, amid concerns that DeepSeek’s offering could reduce the demand for the expensive hardware offered by the U.S. company. Nevertheless, the company asserted that the implementation of artificial intelligence models requires many of its products, such as a significant amount of Nvidia GPUs and high-performance networks.
Concerns regarding the challenge posed by the Chinese company DeepSeek in the realm of artificial intelligence chatbots have affected the AI spending plans of U.S. tech giants.
