The distinction of being the largest and second-largest market cap loser belongs to Nvidia’s stock. Nvidia’s stockholders lost $279 billion in September 2024 and then the biggest one-day drop in stock price happened on Monday, January 27, 2025, when Nvidia’s market cap fell $589 billion after stock shed 16.97%.
Nvidia’s market cap closed at $3.49 trillion and the stock is still up by 90% year-on-year. The 52 Week Range for Nvidia is $60.70 – $153.13.
So, what triggered the crash in Nvidia’s stock? The DeepSeek R1 artificial intelligence model, developed by Chinese start-up DeepSeek, was released, resulting in this drop. This new technology raises concerns about future AI infrastructure expenditures because it claims to match the performance of competitors such as ChatGPT while incurring significantly lower operational costs.
In a statement, Nvidia praised DeepSeek’s introduction as a significant industry achievement and a demonstration of scalability in record time. However, these words did not alleviate market skepticism. Analysts are concerned that such improvements may lead to pricing competitiveness, lowering profit margins in the sector, particularly in the sale of specialist gear such as GPUs.
The question arises whether Nvidia has more downsides.
“Nearer-term creates a new bear case for NVDA. Outstanding questions are: will DeepSeek’s methods fuel even greater innovation and therefore compute demand from Western customers who have access to even better chips than DeepSeek likely had? Similarly, will cheaper inference expand the TAM (Total addressable market) and fulfill “Jevon’s Paradox”? This dents NVDA multiple and could take time to repair,” says John Belton, Portfolio Manager at Gabelli Funds.
Antonio Di Giacomo, Senior Market Analyst at XS.com is of the view that despite immediate concerns, Nvidia is dominant in the AI infrastructure market. With a solid foundation and a track record of adapting to technological trends, the company could capitalize on the opportunities arising from this competitive challenge.
However, the road ahead will be crucial in determining whether Nvidia can overcome this disruption and reaffirm its leadership. Nvidia faces a critical moment, but its expertise and resources could be key to overcoming this challenge and adapting to new market demands.
“Eventually, DeepSeek’s model will be copied by others, just like DeepSeek copied from ChatGPT. But are the markets reacting rationally to this news? Probably not, as there is deep panic due to the unknown value or loss of shares. Most investors have chosen to ‘shoot first, ask questions later’. That is often the wrong approach as these investors will wind up buying stocks at higher prices,” says Bob Lang, President/Chief Options Strategist, Aztec Capital.
So, what should investors do now? “Nvidia might benefit from JevonsParadox, too. As technological advancements make the use of a resource more efficient, the demand for that resource increases because it’s now cheaper and easier to use,” says says Subho Moulik, Founder and CEO, Appreciate.
“So, as AI adoption grows, businesses and data centers will need more Nvidia hardware (like GPUs) and software solutions to handle inferencing workloads. Even though individual AI tasks may require fewer resources, the sheer scale of deployment across industries drives demand. In short, more efficiency means more AI use which means more demand for Nvidia technology. It’s not just Nvidia, the other semicaps that took a battering in the markets – Broadcom and Micron Technology – can be an interesting buy on dip,” adds Moulik.
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