Nvidia records largest single-day loss as Deepseek triggers investors

Nvidia Corporation, the world’s largest AI-chip maker recorded its largest single-day loss in NASDAQ, as its share price crashed by over 17 percent on January 27. The loss was triggered by news of a cheaper, open-source artificial intelligence model from China, DeepSeek which hit the news on Sunday.

In the U.S. equities market, Nvidia wasn’t the sole casualty, as the NASDAQ—home to all major tech giants—reportedly saw over $1 trillion in value wiped off at the start of trading. As of 2:45 PM EST, the S&P 500 was down 1.76 percent, driven by declines that cut across all the tech stocks. Alphabet (GOOGLE) was down 3.76 percent, Tesla was down 3.50 percent, Microsoft was down by 2.58 percent, and Amazon was down 1 percent.

Meta and Apple saw slight gains during the trading session, amid speculation that DeepSeek’s advancements could enable both companies to strengthen their AI capabilities—a challenge they have yet to fully overcome.

Read also: Meet Liang Wenfeng, founder of latest AI sensation, DeepSeek

Signs of a bloodbath were already evident from pre-trading data, as NASDAQ Futures saw declines on Sunday.

According to some investors, the initial reaction at the start of trading was an “overreaction”. Garry Tan, Y-Combinator CEO noted that Jevons paradox may come into play with the introduction of DeepSeek’s LLM which has been made open-source thus eliminating a significant cost implication of building AI models.

Jevons paradox is a phenomenon where improvements in the efficiency of resource use leads to an overall increase in the consumption of that resource, rather than a decrease. The idea of Jevons paradox is also driving the reaction of some of the analysts at some of the world’s asset management firms.

Read also: AI sensation, DeepSeek, hit by cyberattack

Sandeep Deshpande, a stock analyst at JP Morgan opines in line with Jevons paradox that DeepSeek’s efficiency cycle might lead to a more efficient use of AI. This, in turn, may drive a surge in global AI adoption, ultimately boosting demand for Nvidia chips.

C.J Muse, an analyst with Cantor Fitzgerald also sees DeepSeek’s developments as bullish for compute demand, suggesting increased rather than decreased need for GPUs, thus he advocated the need to buy Nvidia on any dip.

Read also: US tech stocks slump on Deepseek’s emergence

However, Srini Pajjuri, an analyst with Raymond James questioned the need for large GPU clusters if DeepSeek’s more efficient models are adopted.

The models unveiled by the Chinese AI company have raised questions about the viability of the proposed $500 billion AI infrastructure project, recently championed by former U.S. President Donald Trump in collaboration with OpenAI’s Sam Altman and SoftBank CEO Masayoshi Son.