- The Opening Print
- Posts
- Nvidia’s $600 Billion Loss: What It Means for AI and Markets
Nvidia’s $600 Billion Loss: What It Means for AI and Markets
Follow @MrTopStep on Twitter and please share if you find our work valuable!
Our View
You know my saying: “These are not our fathers’ markets or charts.” Well, they aren’t, and nor will they ever go back to being so.. Forget the computer age; we now live in a battle of AI. Who’s going to be the biggest? Who’s going to be the best?
Over 15 years ago, maybe longer, the PitBull told me the U.S. was the world leader in technology and always would be. But after yesterday’s action, I’m not so sure about that. For the last two-plus years, it’s been nothing but the Magnificent 7 or the top 10 tech stocks driving the market. My question is this: How could a company like DeepSeek, which only cost $6.5 million, upend almost all of the U.S.’s top tech and AI companies?
Nvidia alone lost over $600 billion in market cap, the largest single-day loss in U.S. stock market history. Despite Nvidia CEO Jensen Huang dismissing the event as a "long-term play," the fallout caused IonQ and others to crash. In reality, this is an existential threat to AI powerhouses and other major AI players. No matter how you frame it, yesterday saw an AI crash.
Monday’s total market wipeout erased $1 trillion in value. Bonds climbed as investors sought haven assets, sending the 10-year note yield down to 4.529%. Bitcoin sold off, dropping below $100,000 before recovering to close at $101,405. Other casualties included Oracle, down 14%; Super Micro Computer, which makes servers used in generative AI, down 13%; and chipmaker Broadcom, which slumped 17%.
No matter how you see it, DeepSeek has cast a high level of doubt over the oversized investments many companies—like Microsoft, which plans to invest up to $80 billion in AI development—are making in this space. It also sheds light on the aforementioned Magnificent 7, a group of seven dominant companies that accounted for more than half of the S&P 500’s total return last year, according to S&P Dow Jones Indices. These include Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla.
The group is simply too concentrated, too loaded up with big names, and backed by mega money. Yesterday’s action raises questions about whether these market leaders have become too dominant, and too vulnerable.