Nvidia’s stock has faced a significant downturn following the launch of DeepSeek’s new AI model, which has sent shockwaves through the tech and financial markets. The company experienced its largest single-day loss in market value on January 27, 2025, dropping nearly 17% and erasing approximately $600 billion from its market capitalization. The catalyst for this drastic shift was DeepSeek’s R1 model, which showcased comparable AI capabilities to Nvidia’s offerings but at a fraction of the cost and computational demands. This development raised concerns about Nvidia's dominance in the AI hardware sector.

Despite the major setback, retail investors are holding onto optimism, with a record $562.2 million in Nvidia stock purchases on January 27, signaling a belief in the company’s long-term potential. As the stock continues to fluctuate, all eyes are on Nvidia to see how it plans to respond to the competitive threat posed by the Chinese AI startup, DeepSeek, and whether it can maintain its leadership position in the rapidly evolving AI industry. The market is closely watching how these dynamics will play out in the coming months.