Shares of Nvidia plummeted more than 11% during premarket trading, marking the company's worst day since March 2020. The sharp decline followed the surprising launch of a free open-source large-language model by DeepSeek in late December. Developed in just two months at a cost of under $6 million, this innovation has sparked concerns about future AI infrastructure spending and its potential impact on various tech companies.
In addition to Nvidia's fall, a host of other tech giants experienced significant stock declines. Constellation Energy, Vistra, Nuscale Power, and Oklo all slid at least 10% in premarket trading. Vertiv Holdings took a particularly hard hit, with shares tumbling 16% due to the reversal in the artificial intelligence trade. The emergence of DeepSeek's model has prompted investors to reevaluate the necessity of Nvidia's fastest chips, raising questions about its competitiveness in the rapidly evolving AI sector.
Microsoft shares shed 5%, while Amazon dropped by more than 4%, and Meta Platforms slid by 2.5%. Broadcom and AMD also felt the impact, with losses of 12% and 4%, respectively. The sell-off extended to other megacap stocks, underscoring the profound effect that DeepSeek's announcement had on market perceptions.
On a more positive note, AT&T posted $32.3 billion in revenue, surpassing analyst expectations. However, the broader tech sector struggled to find stability as the market reacted to the potential implications of DeepSeek's new model. The possibility of reduced AI infrastructure spending looms large, threatening to negatively affect companies like Vertiv, which rely heavily on such investments for growth.
Leave a Reply