Why is Nvidia stock down? Reason for collapse - and if it is related to DeepSeek R1

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Nvidia stock has collapsed after the launch of DeepSeek’s R1 AI-model 🚨
  • Nvidia has had the ‘biggest one-day value wipe-out’ in Wall Street history.
  • Investors were shaken after the launch of DeepSeek’s R1 AI model.
  • Nvidia has lost its place as the most valuable company in the world.

The launch of the Chinese open-sourced AI model DeepSeek-R1 has seen almost $600bn wiped off the value of Nvidia stock in just one day. The tech giant had rocketed to become the most valuable company in the world amid the artificial intelligence gold-rush in recent years.

However the announcement of the latest model from DeepSeek has sent jitters through the stock market. The BBC reports the company claims to have “performance on par with” OpenAI’s models when used for tasks such as maths, coding and natural language reasoning.

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DeepSeek claims to have trained R1 for a fraction of the cost of rival models - such as ChatGPT - at just $6m has spooked investors. Although these claims have been disputed by its American counterparts.

Why is Nvidia stock down?

DeepSeek and Nvidia logosDeepSeek and Nvidia logos
DeepSeek and Nvidia logos | AFP via Getty Images

The tech giant has seen its stock value sky-rocket in recent years, becoming for a while the most valuable company in the world ahead of the likes of Apple, due to its dominance over the supply of AI chips. The launch and surging popularity of DeepSeek-R1 has spooked investors - leading to a sell-off of Nvidia stock.

DeepSeek’s app has shot to the top of the charts on Apple’s app store and Google’s Play store around the world - including in the UK. Reportedly made at a fraction of the cost of American chatbots like ChatGPT, it also doesn’t require an expensive subscription like some OpenAI models.

A combination of these factors has led to the value of Nvidia stock plummeting on Monday (January 27).

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How much has Nvidia stock fallen by?

Forbes reports that Nvidia has seen the “single greatest one-day value wipe-out” of any company in Wall Street history. It lost almost $600bn (approximately £480bn) as its shares plunged 17% by close.

The collapse in value has seen the tech giant lose its place as the world’s most valuable company - at least for now. It has fallen behind both Apple and Microsoft after its valuation fell from $3.5 trillion to $2.9 trillion.

For more on financial updates read about the latest on WH Smith store closures. While in more positive news Hotel Chocolat has announced 200 new jobs in the UK.

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