How China’s DeepSeek Disrupted U.S. Markets and AI Leaders

How China’s DeepSeek Shook Up U.S. Markets: By the Numbers

News from China disrupted U.S. markets on Monday, sending shockwaves through the tech sector and unsettling the frenzy around artificial intelligence (AI).

A Chinese company, DeepSeek, announced the development of a large language model (LLM) capable of competing with U.S. AI giants—at a fraction of the cost. Despite U.S. government restrictions on Chinese access to advanced AI chips, DeepSeek surged to the top of the Apple App Store’s free apps chart, stunning analysts and investors.

The announcement triggered significant declines for tech stocks like Nvidia, Broadcom, and Alphabet (Google’s parent company). Meanwhile, the broader market saw mixed results, with some sectors gaining despite the tech slump.

Let’s break down the numbers to understand DeepSeek’s impact on the financial markets.

Key Stats from Monday’s Market Shake-Up

5.6%

• Decline in the S&P 500 tech sector, marking its worst single-day drop since September 2020.
• Notably, Nvidia was one of eight tech stocks in the sector to post double-digit losses.
• Without Apple’s 3% gain, the index’s decline would have been even sharper.

$590 Billion

• The approximate decline in Nvidia’s market value, equivalent to more than the combined market value of Home Depot and Lowe’s.
• Despite the drop, Nvidia still holds an impressive market cap of approximately $2.9 trillion.

$27.6 Billion

• The amount Oracle CEO Larry Ellison’s net worth fell after the selloff, per the Forbes Real-Time Billionaires list.
• Last week, Ellison’s fortune surged after Donald Trump announced a $500 billion AI infrastructure partnership involving Oracle, OpenAI, and SoftBank.
• Nvidia CEO Jensen Huang also saw his net worth tumble by $20.8 billion, settling at $103.6 billion.

28.3%

• The decline in Vistra Corp.’s stock, the biggest drop for any stock in the S&P 500.
• Vistra, an independent power producer, had soared last year due to expectations that U.S. AI infrastructure would drive significant demand for power.

351 Stocks

• The number of S&P 500 stocks that rose on Monday despite the sharp drop in the index.
• The decline highlights the outsized influence of tech stocks like Nvidia on the overall index.
• The Dow Jones Industrial Average, which has less emphasis on tech, managed to close with a modest gain.

What Does This Mean for Investors?

DeepSeek’s rise has sent a clear message: China is a formidable competitor in AI development, and its advancements can shake the dominance of U.S. tech giants. The volatility in the market underscores the heavy reliance on a few key players in the tech sector, making the broader market vulnerable to disruptions tied to these companies.

While the S&P 500 tech sector suffered, other parts of the market—especially those with less exposure to AI hype—saw gains. Investors should take note of these shifts as the global AI race accelerates.

Key Takeaways

• DeepSeek’s announcement rattled U.S. markets, challenging the dominance of American AI firms.
• Nvidia, Alphabet, and Broadcom saw significant declines, dragging down the S&P 500 tech sector.
• The broader market showed resilience, with more than 350 S&P 500 stocks rising despite the tech selloff.
• DeepSeek’s success, despite U.S. chip restrictions, raises questions about the future of global competition in AI.

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