Nvidia's market value took a massive hit of $589 billion on January 27, 2025, following the emergence of DeepSeek, a Chinese AI startup. DeepSeek's chatbot, developed for just $5.6 million, has been shown to rival the capabilities of U.S. tech giants like Nvidia, raising concerns about the future of American dominance in the AI sector.

Shares of Nvidia dropped nearly 17% on Wall Street as the broader tech sector experienced a significant sell-off, pushing the Nasdaq down more than 3%. DeepSeek, based in Hangzhou, China, became a major disruptor in the AI landscape, offering competitive capabilities at a fraction of the cost compared to U.S. investments in the field.

The news sent shockwaves across the market, causing other AI-linked stocks, including Broadcom and ASML, to fall sharply. Additionally, SoftBank, a key player in the U.S.-led AI infrastructure project, lost over 8% in Tokyo.

Despite some skepticism around DeepSeek’s claims, U.S. President Donald Trump’s recent announcement of a $500 billion AI initiative aimed at strengthening U.S. tech infrastructure only added fuel to the fire.

Meanwhile, interest rate decisions from the U.S. Federal Reserve and European Central Bank are in focus this week, as markets await further economic signals.

Global stock markets, including in Europe and Asia, showed mixed results, with significant declines in tech stocks and a rally in certain Asian indices.

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