January 27, 2025 – Nvidia, a giant in the tech world, saw its shares drop by 10% in premarket trading on Monday, January 27, 2025. The sudden decline came after China’s DeepSeek revealed a groundbreaking AI chip, causing a wave of uncertainty across the global tech market. Investors reacted quickly, leading to a widespread sell-off in tech stocks.
DeepSeek’s New AI Chip Sends Shockwaves Through the Industry
At 6:30 AM EST, DeepSeek, a rising star in China’s tech scene, announced a major breakthrough: a next-generation AI chip that outperforms current market leaders. During a press conference in Beijing, the company shared that its new chip can process complex algorithms 40% faster than existing models. This news directly challenges Nvidia’s stronghold in the AI hardware space, sparking a sharp decline in its stock.
Tech analysts were quick to react. “This is a game-changer,” said Sarah Lin, a well-known tech analyst. “DeepSeek’s chip could shake up the industry, especially in areas like self-driving cars and data centers.”
Nvidia’s stock had already dropped by 8%
By 7:15 AM EST, Nvidia’s stock had already dropped by 8%, and the losses continued, reaching 10% within the hour. The company, known for its cutting-edge GPUs and AI chips, now faces a tough challenge. Nvidia’s CEO, Jensen Huang, is set to address the situation in an emergency investor call at 2:00 PM EST today.
Some experts believe Nvidia’s recent focus on software and AI platforms may have left it exposed to disruptions in hardware. “Nvidia has been branching out, but DeepSeek’s move shows that hardware innovation is still key,” said financial strategist Mark Thompson.
DeepSeek’s announcement was felt worldwide
The impact of DeepSeek’s announcement was felt worldwide. Tech stocks in Asia, Europe, and the U.S. saw significant drops, with the Nasdaq Composite falling 2.5% in early trading. Companies like AMD, Intel, and Qualcomm also faced sharp declines as investors worried about a shift in the market.
In Europe, the STOXX Europe 600 Technology Index dropped by 3.1%, while Japan’s Nikkei 225 closed down 2.8%. In China, DeepSeek’s competitors saw their shares fall by an average of 5%.
As the trading day continues, investors are bracing for more ups and downs. Many are keeping a close eye on Nvidia’s emergency call for hints about its next steps. “The next 24 hours are critical,” said hedge fund manager David Reynolds. “Nvidia needs to show it can stay competitive in this new landscape.”
Meanwhile, DeepSeek’s stock jumped by 15% after the announcement, reflecting growing confidence in its potential as a market disruptor. The company’s CEO, Zhang Wei, shared that the new chip will be available for commercial use by Q3 2025, with several big tech firms already showing interest.
For now, the market remains on edge. As one trader put it, “This is a wake-up call for the entire industry. The race for AI dominance just got a lot more intense.”
