AI Shake-Up: DeepSeek's Game-Changing Impact on Nasdaq

The Nasdaq experienced its largest one-day percentage drop since December 18 due to a sell-off in U.S. chipmakers, triggered by a new low-cost Chinese AI model. Nvidia plummeted 17%, erasing $593 billion in market value. The drop also affected major tech stocks and pushed up Wall Street's fear gauge.

Nasdaq witnessed its largest one-day percentage drop since December 18, with significant losses in U.S. chipmakers following the launch of a low-cost Chinese AI model. Nvidia's shares fell dramatically by 17%, wiping out approximately $593 billion in market value — the largest single-day loss recorded by a company on Wall Street, according to LSEG data.

The semiconductor index dropped 9.2%, marking its most significant single-day percentage fall since March 2020. The Chinese startup, DeepSeek, introduced a free AI assistant using cost-effective chips and less data, casting doubt on investor expectations about AI's role in driving supply chain demand from chipmakers to data centers.

The release of DeepSeek's AI Assistant led to more downloads than the U.S. competitor ChatGPT from Apple's App Store by Monday. Despite this upheaval, investment experts like Kim Forrest suggest the current devaluation may not reflect the long-term market valuation, especially since tech stocks such as Microsoft's have pivotal quarterly results scheduled this week.

(With inputs from agencies.)