DeepSeek R1 Shakes Up US Tech: $1 Trillion Market Loss, NVIDIA Loses $600 Billion

In a surprising turn of events, China’s DeepSeek R1, a cost-effective artificial intelligence model, has caused significant turmoil on Wall Street.

This development has led to a staggering $1 trillion reduction in the market value of technology and energy stocks. Specifically, NVIDIA, previously the most valuable company globally, experienced an unprecedented 18% decline in its stock value, equating to a $600 billion loss.

This disruption has intensified concerns regarding the United States’ leadership role in the AI industry. DeepSeek, a relatively unknown Chinese AI research lab, has challenged Silicon Valley’s longstanding beliefs about AI economics and technical methodologies.

Despite substantial investments from major players like OpenAI, Meta, Google, and Microsoft, DeepSeek has managed to achieve industry-leading results at a significantly lower cost. Within just weeks, DeepSeek’s chatbot app has outperformed OpenAI’s ChatGPT on the App Store, sending shockwaves through Wall Street and affecting tech stocks dramatically.

NVIDIA’s unprecedented growth, closely linked with the rising popularity of OpenAI’s ChatGPT in 2023, had pushed its market valuation to $3.7 trillion, placing it among the world’s top companies. However, DeepSeek’s R1, requiring substantially less computing power than that of US tech giants, has cast doubts on Silicon Valley’s strategies, causing NVIDIA’s valuation to drop steeply to $2.9 trillion.

The impact extended beyond NVIDIA, with companies like Oracle, Palantir, Alphabet, and Microsoft also experiencing stock declines. The broader market impact saw Dell Technologies lose over eight percent and major indices like Nasdaq and S&P 500 record their most significant one-day percentage drops of 2025. Even energy sectors, such as Siemens and GE Vernova, were not immune, contributing to the overall $1 trillion valuation loss.

Founded in 2023 following US export restrictions on advanced chips to China, DeepSeek’s development is notable. Despite such constraints, founder Liang Wenfeng utilized a reserve of banned NVIDIA A100 chips to fuel DeepSeek’s rise. As the company continues to gain traction, it faces the challenge of acquiring additional computing resources to manage increasing demand for AI inference, which involves using a trained model to evaluate new data.

NVIDIA remains optimistic, emphasizing ongoing demand for its GPUs, which play a vital role in AI inference processes requiring robust computational capabilities. The company plans to continue supplying export-compliant chips internationally, viewing DeepSeek’s advancements as a testament to the potential of alternative AI approaches.

President Trump has described this situation as a ‘wake-up call’ for the US technology sector, urging a competitive response and suggesting that the open-source aspect of DeepSeek’s technology could be an opportunity to enhance US offerings.