US stock market: NVIDIA share price crashes 17% on DeepSeek fear

US stock market: Following concern over Chinese Air Intelligence (AI) start-up DeepSeek, NVIDIA share price witnessed sharp selling on Monday. NVIDIA stock price opened lower at $124.80 apiece on the NASDAQ and touched an intraday low of $116.70 per share.

NVIDIA market cap loses over $600 billion

NVIDIA’s market cap was about $465 billion during the Opening Bell, as NVIDIA shares slipped around 13 per cent during early morning deals on Monday. However, the DeepSeep AI fear in the US stock market continued to enable bears to outperform bulls, and NVIDIA stock finally ended around 17 per cent lower, losing over $600 billion in market cap during Monday deals. 

According to stock market experts, the Chinese low-cost Start-up DeepSeek AI model has put doubts in the minds of the global market investors, and this route in NVIDIA share price and NVIDIA market cap can be attributed to this fear only.

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, said, “The latest low-cost AI model of DeepSeek, released last week, is widely seen as competitive with those of OpenAI and Meta Platforms Inc. This has put doubt into the minds of stock market investors, who are squaring off their position in tech stocks. So, NVIDIA and other tech stocks are under pressure.”

NVIDIA share price outlook

Advising the ‘exit on rise’ strategy to NVIDIA shareholders, Mahesh M Ojha, AVP — Research at Hensex Securities,  said, “NVIDIA stock price is looking weak on the technical chart while from the fundamental perspective, the NASDAQ-listed stock is already weak. So, one should avoid bottom fishing in this stock and existing shareholders are advised to hold the scrip with a strict stop loss at $105 apiece. NVIDIA shares may witness some relief rally and come around 124 and ₹135 per share levels.”

The Hensex Securities expert said that on breaching below $105 levels, NVIDIA share price may touch $90 apiece levels in the near-term.

Asian stock market opens lower

Following the weak sentiments of the US stock market, the Asian stock market is also feeling the sell-off heat in early morning deals on Tuesday as traders braced for a turbulent Tuesday. This follows a bruising session on Wall Street, during which cracks appeared in the artificial intelligence sector, powering the bull market.

A selloff was triggered after a cheap AI model from Chinese startup DeepSeek climbed to the top of Apple’s app store, sparking concerns that valuations of the technology may be tough to justify. Japanese stocks fell, with chip-related shares extending Monday’s declines. That was after the S&P 500 dropped 1.5% and the Nasdaq 100 sank 3%. Nvidia Corp., the poster child of the AI boom, suffered the biggest market-cap loss for a single stock in market history.

“What was shaping up to be a big week in the markets got even bigger with the disruption in the AI space,” said Chris Larkin at E-Trade from Morgan Stanley. “That could make this week’s megacap tech earnings even more critical to market sentiment.”

Monday’s AI slump drove new fissures into a market narrative that prevailed since the re-election of Donald Trump in November, the America-first, tech-fueled bullishness that saw a clear upward path for risk assets spurred by deregulation, tax cuts and even government sponsorship of AI investment.

Losses extended for Japan’s chip-related shares including Advantest Corp., SoftBank Group and Furukawa Electric Co., which were got caught in the global tech selloff on Monday.

Treasuries edged lower Tuesday with the 10-year yield rising two basis points to 4.56% after sinking nine basis points on Monday. Australia’s 10-year yield fell five basis points. The Bloomberg Dollar Spot Index rose 0.3%, extending Monday’s gains.

The severity of the rout in US assets was proportionate to the weightings of AI-enabled firms in the biggest stock indexes. Even after a recent paring to curb their influence, the cohort of Nvidia, Apple Inc., Microsoft Corp., Amazon.com Inc., Meta Platforms Inc. and Alphabet Inc. account for about 40% of the Nasdaq 100. It’s roughly 30% in the S&P 500.

(With inputs from Reuters) 

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