Jensen Huang's Wealth Plunges as DeepSeek Upends AI Industry

Nvidia CEO Jensen Huang saw his on-paper wealth plummet by 20% on Monday, as the AI industry grappled with the emergence of DeepSeek, a Chinese startup that has sparked concerns about increased competition and the sustainability of high AI-related spending. Nvidia's stock price dropped 17% on Monday, erasing approximately $589 billion from its market capitalization, marking the largest single-day loss in US corporate history.

The sell-off, which hit much of the U.S. tech sector, was sparked by concerns about increased competition from DeepSeek, which released an open-source AI model that was developed in just two months at a fraction of the cost required by US-based firms like OpenAI. This development raised questions about the sustainability of high AI-related spending, particularly on Nvidia's graphics processing units (GPUs) that dominate the AI chip market.

Nvidia's stock price plummeted 17% to close at $118.58, marking its most significant drop since March 2020 during the early days of the Covid-19 pandemic. After Nvidia surpassed Apple last week to become the most valuable publicly traded company, the stock's drop Monday led a 3.1% slide in the tech-heavy Nasdaq.

The sell-off was part of a broader tech downturn that saw the Nasdaq Composite fall 3.1%, its worst day since December. Nvidia shares closed at $118.58, marking their most significant drop since March 2020 during the early days of the Covid-19 pandemic. Monday’s plunge also dethroned Nvidia as the world’s most valuable publicly traded company, at $2.9 trillion, pushing it back to third place behind Apple and Microsoft.

The downturn was triggered by DeepSeek’s launch of an open-source R1 model, which the company claims was trained in just two months at a fraction of the cost required by US-based firms like OpenAI. This development has raised questions about the sustainability of high AI-related spending, particularly on Nvidia's graphics processing units (GPUs) that dominate the AI chip market.

Nvidia itself described DeepSeek’s innovation as “an excellent AI application” and acknowledged that the Chinese startup had achieved “impressive results” with its open-source model. However, the company also emphasized that inference still requires significant numbers of their GPUs and high-performance networking, suggesting that demand for their chips will remain strong.

The sudden excitement around DeepSeek over the weekend pushed its app past OpenAI's ChatGPT as the most-downloaded free app in the U.S. on Apple's app store. The model's development comes despite a slew of recent curbs on U.S. chip exports to China.

Venture capitalist David Sacks, who was tapped by Trump to be the White House's AI and crypto czar, wrote on X that DeepSeek's model "shows that the AI race will be very competitive" and that Trump was right to rescind President Joe Biden's executive order last week on AI safety.

Nvidia is now the third most-valuable public company, behind Apple and Microsoft.




In conclusion, the emergence of DeepSeek has significant implications for the broader AI industry, including increased competition, shifts in investment focus, geopolitical considerations, potential impacts on AI chip demand, talent attraction, and regulatory and ethical concerns. These factors will likely influence investment decisions in the AI sector, as investors and companies adapt to the changing landscape.