Shares in chip manufacturer Nvidia (NASDAQ:NVDA) fell by 17% on Monday, its worst daily percentage loss since the start of the Covid pandemic in March 2020 briefly crashed the markets.

It was the single greatest one-day value wipeout any company has ever suffered. The previous record of $279 in September 2024 was also held by Nvidia.

The loss of $589 in market capitalization knocked the company from its position as the world’s most valuable company. Its valuation fell from $3.5 trillion to $2.9 trillion, putting it back below Apple and Microsoft.

Other tech stocks also took a hit. Micron (NASDAQ:MU) tumbled 11.7%, AMD (NASDAQ:AMD) closed down 6.4%, Cisco (NASDAQ:CSCO) closed lower by 5$. Alphabet (NASDAQ:GOOG), Intel (NASADAQ:INTC), Tesla (NAASDAQ:TSLA) and Microsoft (NASDAQ:MSFT) also ended sharply lower.

The fall, which was part of a general sell-off of tech stocks, was prompted by the announcement by Chinese company DeepSeek that it had developed a large-language model at a fraction of the cost of previous AI companies such as OpenAI’s ChatGPT. DeepSeek said it had spent just $5.6 million on Nvidia technology to develop its product. This puts the brakes on Nvidia’s meteoric rise, which saw its profits soar due to demand for its GPUs from tech giants developing AI such as Meta and OpenAI.

If it turns out that the most powerful hardware is not necessary to produce the best AI models, then Nvidia’s sales could be hit, meaning its stock looks badly overpriced.

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