The world’s 500 wealthiest individuals lost a combined $108 billion on Monday following a sell-off triggered by Chinese artificial intelligence (AI) developer DeepSeek. The market decline affected major indices, with the Nasdaq Composite Index falling 3.1% and the S&P 500 dropping 1.5%.
Tech billionaires were the hardest hit. Nvidia Corp. co-founder Jensen Huang saw his net worth decline by $20.1 billion, representing a 20% loss. Oracle Corp. co-founder Larry Ellison lost $22.6 billion, equivalent to 12% of his fortune. Dell Inc.’s Michael Dell recorded a $13 billion loss, while Binance Holdings Ltd. co-founder Changpeng Zhao lost $12.1 billion.
DeepSeek, a Hangzhou-based AI company, has been developing AI models since 2023. Over the weekend, its DeepSeek R1 chatbot topped download charts globally. The surge in demand led to system outages, forcing the company to restrict new sign-ups to users with Chinese phone numbers.
Read also: Meet Liang Wenfeng, founder of latest AI sensation, DeepSeek
The company’s AI model, developed at a cost of $5.6 million, challenges the prevailing view that massive capital investment is essential for AI development. This raised concerns among investors tied to the Western AI supply chain, which has driven stock market gains over the past two years.
Technology giants such as Meta Platforms Inc., Alphabet Inc., and Microsoft Corp. have invested heavily in AI. Since OpenAI introduced ChatGPT in November 2022, AI-focused firms have generated substantial wealth for their owners. Meta CEO Mark Zuckerberg recently announced plans to spend between $60 billion and $65 billion on AI projects in 2024, exceeding Wall Street expectations. Analysts estimate that capital expenditure across major tech firms could reach $200 billion by 2025.
Despite high spending, revenue generation from AI remains limited. Market confidence, however, has driven stock valuations to record highs, significantly increasing the wealth of tech billionaires. Huang’s net worth rose nearly eightfold to $121 billion since early 2023. Zuckerberg’s fortune grew by 385% to $229 billion, while Amazon founder Jeff Bezos saw a 133% rise to $254 billion.
Read also: DeepSeek copied OpenAI — Experts
While Huang and Ellison faced losses, Zuckerberg gained $4.3 billion as Meta shares rebounded. Bezos added $632 million to his wealth.
The success of DeepSeek’s AI model without heavy investment led investors to question Silicon Valley’s reliance on capital spending. DeepSeek, operating under US export controls, reportedly possesses significant GPU resources. Alexandr Wang, CEO of Scale AI, suggested that Chinese AI labs may have more Nvidia H100 chips than previously estimated, despite restrictions.
The market reaction to DeepSeek’s rise highlights concerns over the sustainability of AI investments and the competitive landscape between Chinese and Western AI developers.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
