AI Disruption: Chinese Model Challenges Nvidia's Market Dominance

Technology shares faltered as Nvidia faced substantial market losses due to a low-cost Chinese AI model rival. Investors were cautioned by global tech stock drops. DeepSeek's entry reshaped AI perceptions while Nvidia's valuation lured retail investors amid market skepticism and leveraged trading pressures.

The burgeoning recovery in technology shares stumbled as Nvidia, a leader in AI chip production, grappled with a record-breaking loss. The fall was fueled by the emergence of a low-cost AI model from Chinese startup DeepSeek, which threatens to disrupt the dominance of U.S. competitors.

Despite Nvidia's attempts to regain its footing with a 0.7% rise, the previous session saw a $593 billion market value loss, the biggest one-day loss for any company. This sent shockwaves through stocks linked to AI, causing a widespread dip across international tech markets, highlighted by a drop of over $1 trillion collectively.

DeepSeek's immediate impact highlights a shift in global AI competition. While skepticism persists around their claims, OpenAI's CEO and former U.S. President Trump acknowledged the disruptive potential. Market uncertainty looms as stakeholders reassess AI investments reflecting mixed corporate performances and a wary investor landscape.

(With inputs from agencies.)