This week, DeepSeek’s introduction of its R1 model, boasting superior performance at only 3% the cost of OpenAI’s technology, sent shockwaves through the AI market. This revelation led to a steep decline in NVIDIA’s stock price and caused the value of several tech industry titans to decrease significantly. The largest drop was experienced by NVIDIA, losing approximately $500 billion in market value within a day. This number could potentially rise even more, setting records that NVIDIA may prefer not to hold. By midday, NVIDIA’s stock had fallen over 15%, and the impact of DeepSeek’s announcement is being felt across other major tech companies as well.
On any given day, NVIDIA’s substantial loss could potentially break the record for the largest single-day market value loss ever experienced by a company. However, we won’t know for sure until the end of trading which records will be broken. As it stands now, NVIDIA currently holds the title for the most significant daily market loss, having shed approximately $279 billion in value on September 3, 2024.
At the time of publication, the NASDAQ is down 3.43% and the S&P 500 is down 1.9%.
Due to significant losses in today’s market, NVIDIA has relinquished its position as the world’s most valuable company. This honor has been taken over by Apple, while both NVIDIA and Microsoft have experienced stock decreases; Apple slightly more than Microsoft with a 3% drop today.
Why has NVIDIA stock fallen?
Following the announcement of DeepSeek’s R1 language model, there was a noticeable drop in NVIDIA’s stock value. This model, it’s claimed, surpasses OpenAI’s models in performance while needing just 3% of the cost.
Interestingly, DeepSeek utilized NVIDIA GPUs in training its R1 model, a move that might initially appear beneficial for NVIDIA. However, this development could potentially disrupt the current AI market significantly. Until now, the expense of training AI models has been astronomical. For instance, OpenAI reportedly lost $5 billion in 2024 and spends approximately $700,000 daily to operate ChatGPT. If DeepSeek’s R1 model can match or even surpass OpenAI’s performance while requiring only a fraction of the cost (3%), it could radically change the landscape of generative AI.
Should smaller companies manage to build equally effective generative AI models at a significantly lower price point than what OpenAI, Google, and Meta currently invest, it could potentially diminish the value of their efforts in this field.
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2025-01-27 22:10