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Nvidia Lost Nearly $593 Billion in Value as DeepSeek Shook Tech Stocks

Nvidia’s January 27, 2025, selloff erased nearly $593 billion in market value as investors weighed whether DeepSeek could make competitive AI for less.
From TheFinanceBase Team4 min to read
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On January 27, 2025, Nvidia shares fell 16.9% and the Nasdaq Composite dropped 3.1% as investors reassessed the competitive threat posed by Chinese AI company DeepSeek. Reuters put Nvidia’s one-day market-cap loss at nearly $593 billion—not $400 billion. The episode was a sharp repricing of expectations, not evidence that the same amount of cash left Nvidia or that its long-term business value had permanently changed.

What happened on January 27, 2025?

Investors sold shares in Nvidia and other AI-linked companies after news about DeepSeek raised questions about how much computing power and spending would be needed to build competitive AI systems. The move was concentrated in technology stocks rather than a broad decline across the entire US market.

The Associated Press reported Nvidia down 16.9% for the session and the Nasdaq Composite down 3.1%. The S&P 500 fell 1.5%, while the Dow Jones Industrial Average rose 0.7%; AP said most US stocks advanced. AP’s January 27 report characterized the losses as focused on AI-related shares.

Why does the headline figure differ from $400 billion?

Reuters reported that Nvidia lost nearly $593 billion in market capitalization on January 27, describing it as the largest one-day market-cap loss at that time. Reuters also put the share decline at 17%, a rounded figure consistent with AP’s 16.9%. The $400 billion figure in the original headline does not match these reports, so nearly $593 billion is the better-supported estimate. Reuters’ January 28 report, carried by Kitco, gives the market-cap estimate.

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Market capitalization is calculated by multiplying a company’s share price by its shares outstanding. A market-cap decline therefore reflects the market value assigned to those shares at that point; it is not a bill paid by the company, a tally of cash withdrawn, or a settled measure of what the business is worth over the long term.

Why did DeepSeek unsettle investors?

Contemporary coverage linked the selloff to investor concern that DeepSeek could develop AI models competitive with US offerings at a fraction of the cost. If capable models can be built with less computing infrastructure or spending than investors had expected, the potential economics of the AI buildout—and the outlook for companies supplying the hardware—could look different. AP and Reuters described this as the market’s concern; their reports do not establish that DeepSeek alone caused the drop or that lower-cost models will permanently reduce demand for Nvidia products.

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The reaction also reflected uncertainty about the technology and its implications. Axios quoted Morningstar chief US market strategist Dave Sekera saying, “People are selling first and will ask questions later,” an interpretation of investor behavior rather than a measurement of the market’s motive. Axios’s January 27 coverage also reported Nvidia’s response.

What was Nvidia’s response—and what remained uncertain?

An Nvidia spokesperson called DeepSeek “an excellent AI advancement and a perfect example of Test Time Scaling.” The spokesperson said the work showed how new models can be created using that technique and widely available models and compute that is fully export-control compliant. The company’s argument was that inference—the process of running a trained model—still “requires significant numbers of NVIDIA GPUs and high-performance networking.” Those comments state Nvidia’s position, not an independent finding that resolves how much hardware future AI systems will require.

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There was also contemporaneous uncertainty over the chips DeepSeek used. AP quoted Wedbush Securities analyst Dan Ives saying it remained to be seen whether DeepSeek had worked around chip restrictions and what chips it ultimately used. That comment identifies an open question at the time; it is not proof of which hardware the company used.

How did export controls fit into the debate?

In its Form 10-K for the fiscal year ended January 26, 2025, Nvidia said US export controls had harmed its competitive position and that further changes could affect future results. The filing listed products subject to worldwide licensing requirements—including A100, A800, H100, H200, H800, B100, B200, GB200, L4, L40S and RTX 6000 Ada—subject to applicable classifications and exceptions. It also described risks to sales in China and other markets. These disclosures provide business context, but they do not establish that export controls caused the January 27 selloff or describe current rules. Nvidia’s FY2025 filing with the SEC contains the company’s risk discussion.

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Did the selloff continue the next day?

Not in the early trading snapshot reported by Reuters on January 28, 2025: Nvidia was up about 2.5%, and the Nasdaq was up more than 1%. Those were early-session moves, not closing figures for the day, and a partial rebound does not by itself show whether investors’ longer-term concerns were resolved.

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What this episode does—and does not—show

The January 27 move shows how quickly investors can revise expectations when a development appears to challenge the economics of a fast-growing industry. It does not prove that DeepSeek permanently changed demand for Nvidia’s chips, establish a lasting change in the company’s competitive position, or make the market-cap loss a direct measure of business damage. The cited reports cover the historical reaction; they do not establish Nvidia’s current share price, valuation, or investment outlook.

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