Tech Stocks Clouded by DeepSeek: 8 Biggest Losers as AI Race Heats Up

The artificial intelligence (AI) sector is poised for significant growth in 2025, with several companies leading the charge in innovation and market expansion. Investors seeking opportunities in this dynamic field should consider the following top AI stocks, each demonstrating strong potential for substantial returns.

NVIDIA Corporation (NVDA)
NVIDIA stands at the forefront of AI hardware and software solutions, renowned for its high-performance graphics processing units (GPUs) essential for AI applications. In 2024, NVIDIA's market value surged by over $2 trillion, reaching $3.28 trillion, driven by the escalating demand for AI-centric chips.
The company's strategic investments, totaling $1 billion in AI startups during 2024, underscore its commitment to advancing AI technologies.
As of January 2, 2025, NVIDIA's stock price is $134.29, reflecting a slight decrease of 2.09% from the previous close. Analysts project continued growth for NVIDIA, citing its dominance in AI chip development and integration across various sectors.

Microsoft Corporation (MSFT)
Microsoft has solidified its position in the AI landscape through substantial investments and strategic partnerships. The company's collaboration with OpenAI and the integration of AI capabilities into its Azure cloud services have been pivotal in its AI strategy. In 2024, Microsoft's market valuation reached $3.1 trillion, reflecting its robust AI initiatives.
As of January 2, 2025, Microsoft's stock price stands at $421.50, showing a modest decline of 0.83% from the previous close. With AI projected to drive significant capital expenditures exceeding $2 trillion over the next three years, Microsoft's comprehensive AI ecosystem positions it favorably for sustained growth.

Alphabet Inc. (GOOGL)
Alphabet, Google's parent company, has been a pioneer in AI through its subsidiaries like DeepMind and its extensive AI research initiatives. The company's AI advancements span various applications, including natural language processing and autonomous technologies. In 2024, Alphabet's market valuation reached approximately $2.3 trillion, underscoring its significant presence in the tech industry.
As of January 2, 2025, Alphabet's stock price is $189.30, reflecting a decrease of 0.99% from the previous close. Alphabet's continuous innovation in AI and its integration across its product and service offerings make it a compelling consideration for investors.

Meta Platforms Inc. (META)
Meta Platforms, formerly Facebook, has been integrating AI to enhance user experiences across its social media platforms and to develop new technologies for the metaverse. The company's AI initiatives aim to improve content recommendations, advertising efficiency, and virtual reality experiences.
As of January 2, 2025, Meta's stock price is $585.51, showing a decline of 0.96% from the previous close. Meta's commitment to AI-driven innovation positions it as a significant player in the evolving digital landscape.

Advanced Micro Devices Inc. (AMD)
AMD has emerged as a formidable competitor in the AI hardware market, developing advanced processors and GPUs tailored for AI workloads. The company's focus on high-performance computing solutions has enabled it to capture a growing share of the AI market.
As of January 2, 2025, AMD's stock price stands at $120.79, reflecting a decrease of 1.32% from the previous close. Analysts anticipate that AMD's advancements in AI hardware will contribute to its growth in the coming years.

Tesla Inc. (TSLA)
Tesla's integration of AI extends beyond autonomous driving to include manufacturing processes and energy solutions. The company's Full Self-Driving (FSD) technology relies heavily on AI to navigate complex driving scenarios.
As of January 2, 2025, Tesla's stock price is $403.84, showing a decline of 3.26% from the previous close. Tesla's ongoing AI developments in the automotive industry make it a noteworthy consideration for investors interested in AI applications within transportation.

International Business Machines Corp. (IBM)
IBM has a longstanding history in AI, with its Watson platform being utilized across various industries for data analysis and decision support. The company's focus on AI-driven enterprise solutions continues to evolve, addressing complex business challenges.
As of January 2, 2025, IBM's stock price stands at $219.83, reflecting a slight decrease of 0.12% from the previous close. IBM's expertise in AI for business applications positions it as a stable investment in the AI sector.

Oracle Corporation (ORCL)
Oracle has been integrating AI into its cloud services and enterprise software solutions, aiming to enhance data management and business analytics capabilities. The company's AI-driven applications assist organizations in optimizing operations and decision-making processes.
As of January 2, 2025, Oracle's stock price is $166.64, showing a decrease of 0.12% from the previous close. Oracle's commitment to AI integration within its cloud services and enterprise software solutions positions it as a strong contender in the AI sector.

Chipmaker Nvidia saw almost $600bn wiped off its market value - the biggest drop in US stock market history - as a low-cost AI competitor from China took chunks out of several tech firms.
Nvidia, Meta Platforms, Microsoft, and Alphabet all saw their stocks come under pressure as investors questioned whether their share prices, already widely viewed as overblown following a two-year AI-led frenzy, were justified.
Market analysts put the combined losses in market value across US tech at well over $1trn (£802bn).
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Leading AI chipmaker Nvidia's shares bled 11% at the open on Wall Street but were up to 17% lower during afternoon dealing, while the tech-focused Nasdaq index slid by more than 3%.
The declines were all put down to the emergence late last week of a Chinese AI chatbot that uses lower-cost chips.
It has since become the most popular free application on Apple's App Store across the US.
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Start-up DeepSeek said its free app uses less data at a fraction of the cost of incumbent players' own large language assistants.
The market response intensified later in the day despite revelations DeepSeek was limiting new registrations due to the fallout from a cyberattack and complications caused by high demand.
Brian Jacobsen, chief economist at Annex Wealth Management, said the company's cost claims had placed in doubt the market's AI-led dominance of the past two years that have seen AI-linked stocks repeatedly hit new highs.
He said of the repercussions: "It could mean less demand for chips, less need for a massive build-out of power production to fuel the models, and less need for large-scale data centres.
"However, it could also mean that AI becomes more accessible and help kickstart the development of a wide array of useful applications," he added.
DeepSeek's AI assistant is certainly proving popular, having overtaken ChatGPT on the App Store.
The chatbot's performance has even attracted praise from US rivals despite questions continuing to swirl over the 2023-founded company's technological development.
It was achieved despite tech export controls, designed to protect US patents, imposed on China by president Joe Biden in 2021.
Nvidia responded to the sell-off in its shares with a statement suggesting that DeepSeek's progress demonstrated the usefulness of its chips for the Chinese market and argued that more of its chips will be needed in future to meet demand for DeepSeek's services.
The share price movements will likely be of concern to Mr Biden's successor in the White House, Donald Trump, who has long accused Chinese firms of profiting from US technology.
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It also remains to be seen whether he will see the competition as aggressive towards US firms, having already indicated he is minded to allow Chinese-owned TikTok to escape a US ban but through shared ownership to help offset national security concerns.
Russ Mould, investment director at AJ Bell, said DeepSeek's progress could mark an own goal for the world's largest economy.
"The US government - both under Donald Trump and previously under Joe Biden - have been trying to stop China from accessing Western technology.
"That strategy might have backfired as it looks to have encouraged China to ramp up efforts to build its own technology and we're now seeing evidence that the country is making waves."
Market experts said AI customers could ultimately benefit from a share price bounce once the market settled due to improved competition bringing down prices.
Away from the United States, another company licking its wounds on Monday was SoftBank, the Japanese investment firm.
Its shares were 8% down on the day, erasing all the gains seen since last week when Mr Trump announced SoftBank was part of an investment of up to $500bn (£400bn) in US AI infrastructure.

AFP via Getty Images
DeepSeek released its R1 reasoning model on Jan. 20, sending shockwaves through the stock market.
Chinese artificial intelligence startup DeepSeek rattled the U.S. technology sector after the company recently unveiled an AI model that is competitive with