Nvidia and Broadcom Stocks Plunge in 2025 Amid DeepSeek's Low-Cost AI Breakthrough
In 2025, Chinese startup DeepSeek disrupts the AI chip market with a cost-effective model running on less advanced chips, causing major tech stocks like Nvidia and Broadcom to fall sharply.
In a significant market development on Monday, shares of leading technology companies, including Nvidia and Broadcom, experienced steep declines following the launch of an innovative AI model by Chinese startup DeepSeek. This new AI technology operates efficiently on less sophisticated and more affordable chips compared to those used by U.S. competitors such as OpenAI.
Key Highlights
- DeepSeek's AI model challenges the dominance of advanced U.S. AI chips by delivering comparable performance at a fraction of the cost.
- Major chipmakers like Nvidia saw their stock prices drop over 16%, while Broadcom and Micron Technology fell approximately 17% and 11% respectively.
- Even sectors closely tied to AI infrastructure, such as nuclear power providers Constellation Energy and Vistra, faced declines exceeding 20%.
DeepSeek's app quickly became a top download on the U.S. Apple Store, signaling strong market interest. Despite U.S. export restrictions on cutting-edge semiconductor technology, DeepSeek claims its AI performance rivals ChatGPT, marking a potential shift in the global AI landscape.
Additionally, shares of Taiwan Semiconductor Manufacturing Co. (TSMC) and ASML Holding, key players in semiconductor manufacturing and equipment, dropped 13% and 6%, respectively.
Citi Maintains Nvidia Buy Rating Amid Market Volatility
Despite the market downturn, Citi analysts reaffirmed their buy rating on Nvidia, emphasizing ongoing demand for advanced AI chips. They noted that while DeepSeek's achievements are notable, the startup likely utilized advanced GPUs for model fine-tuning and development.
Citi highlighted that U.S. companies retain an edge in accessing cutting-edge chips, a strategic advantage in an increasingly restrictive global environment.
This story has been updated to include the latest share price movements.
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