Nvidia stock plummeted 16% as U.S. markets broadly declined, with the Nasdaq leading losses. The selloff hit artificial intelligence infrastructure makers hardest, with many stocks dropping double digits.
The rout followed China's release of DeepSeek, an AI model that threatens to disrupt the semiconductor industry's growth narrative. DeepSeek reportedly achieved competitive results at a fraction of the typical development cost, raising questions about whether companies need to spend as aggressively on Nvidia's expensive chips to build powerful AI systems.
This matters because Nvidia has driven much of the market's gains over the past two years. Investors have bet heavily that demand for its graphics processors would grow endlessly as companies race to build AI capabilities. DeepSeek suggests that assumption may not hold.
The immediate question is whether this represents a temporary pullback or signals a longer correction in AI-related stocks. Investors will watch for guidance from chip makers on future demand and for any shifts in corporate spending plans. The broader market reaction indicates real concern that the AI boom's economics have changed, at least for now.