NVDA

The release of DeepSeek's new large language model, DeepSeek-R1, has been a significant factor in the decline of Nvidia's stock. This model has demonstrated competitive performance in global benchmarks, using less advanced semiconductor chips and costing significantly less to develop than Nvidia's models. The open-sourcing of this model by DeepSeek has raised concerns among investors about the competitiveness of Nvidia's AI offerings and the potential for erosion of its market share.

There are concerns that Nvidia's dominance in the AI market might be challenged by DeepSeek's innovative approach. This has led to a perception among investors that Nvidia's high market valuation may be unsustainable, as the company's growth narrative is closely tied to the demand for cutting-edge AI hardware. The success of DeepSeek's model questions the growth prospects of chipmakers like Nvidia, who have seen their valuations soar on the back of AI-driven demand for their hardware.

Nvidia's stock decline has also been influenced by the company's exposure to export restrictions. Under new U.S. laws, Nvidia's high-performance processors are now subject to more stringent export restrictions, which could impact its ability to sell its products in key markets. This regulatory uncertainty has contributed to the volatility in Nvidia's stock price.