Nvidia faces historic market crash following AI competition fears

In the United States, Nvidia, a leading chipmaker, experienced a major setback as its stock price plunged nearly 17 percent on January 27, 2025. This marked the largest one-day loss in market value, amounting to approximately $589 billion. The sell-off was triggered by concerns regarding the emergence of DeepSeek, a Chinese artificial intelligence firm that recently introduced a low-cost AI model claimed to outperform its rivals. Investors were taken aback by this significant competition, raising fears about America’s dominance in the tech sector and causing a ripple effect throughout the market. Consequently, single-stock ETFs that were heavily invested in Nvidia also plummeted overnight, leading to major losses for investors who viewed Nvidia as an invincible stock. These developments have prompted discussions among market analysts about the volatility and risks associated with single-stock ETFs, which strive to deliver amplified returns but can also lead to substantial losses. By January 28, 2025, Nvidia's shares appeared to recover slightly, gaining close to five percent in pre-trading, but the overall sentiment indicated uncertainty about the future of tech investments amidst rising competition from international players. The situation raises pertinent questions about the sustainability of Nvidia's growth amid increasing global competition, especially in the realm of AI technologies. Investing experts warned that while single-stock ETFs can be effective trading tools for savvy investors, they may not be suitable for those lacking a high-risk tolerance, as the dramatic movement of stock prices can yield significant consequences. Overall, the emergence of a powerful competitor like DeepSeek suggests a possible shift in the landscape of AI technology and its market dynamics moving forward.