Nvidia has been on an unstoppable run for the last two years, dominating the artificial intelligence (AI) chip market like no other company. But recently, something changed. A new Chinese start-up, DeepSeek, has entered the scene, claiming to have built an AI platform comparable to ChatGPT at a fraction of the cost. Investors, always quick to react, have been dumping Nvidia shares in fear of new competition. But is this reaction overblown?
Nvidia’s Meteoric Rise—And Sudden Stumble
Since OpenAI launched ChatGPT in late 2022, Nvidia has been the biggest winner of the AI revolution. Between Nov. 30, 2022, and Jan. 24, 2025, Nvidia’s stock price skyrocketed by 743%, adding nearly $3 trillion in market value. The company was riding high, seemingly invincible, with investors betting big on its dominance in AI chips.
Then, the unexpected happened. DeepSeek, a Chinese AI start-up, announced that it had developed an AI platform that could compete with ChatGPT while being significantly cheaper to run. Almost immediately, Nvidia’s stock tumbled, shedding nearly $600 billion in market capitalization.
One moment, Nvidia was the golden child of the AI boom. The next, investors were scrambling to offload their shares.
How Badly Has Nvidia Been Hit?
The numbers speak for themselves. Before DeepSeek made headlines, Nvidia was sitting on a $3.5 trillion market cap. As of Feb. 4, it had dropped to around $3.3 trillion—a staggering $600 billion decline in just a few days.
For perspective, that’s more than the entire market capitalization of some major tech companies, including Meta and Tesla.
Looking at Nvidia’s stock price:
- On Jan. 24, Nvidia was trading near its all-time high of $153.13.
- By Feb. 4, shares had dropped to around $133.57.
- That’s a roughly 13% decline in less than two weeks.
Yet, despite this decline, Nvidia is still the undisputed AI chip leader. The sell-off might be painful in the short term, but is it truly warranted?
DeepSeek’s Threat: Real or Overhyped?
DeepSeek’s claim that it can build a ChatGPT-like model at a lower cost is what’s fueling investor anxiety. But there’s more to the story than just cost savings.
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Hardware Still Matters
- Even if DeepSeek creates a cheaper AI model, it still needs powerful chips to run it.
- Nvidia’s GPUs remain the gold standard for AI computing.
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Software and Ecosystem
- Nvidia isn’t just a chip company—it has an entire AI ecosystem (CUDA, software frameworks, and cloud partnerships).
- DeepSeek’s AI might be promising, but building a full-stack AI infrastructure takes years.
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Regulatory Uncertainty
- The U.S. government has been tightening chip export restrictions to China.
- If DeepSeek wants to grow, it may face supply chain challenges.
The Case for Nvidia Hitting $4 Trillion
The market’s reaction might be premature. Nvidia still holds the key to AI hardware dominance, and its growth story is far from over.
- AI Demand Is Still Surging: Companies worldwide are racing to adopt AI, and Nvidia’s chips remain essential.
- Generative AI Boom: From enterprise applications to cloud computing, Nvidia’s hardware is deeply embedded in the AI revolution.
- Strong Financials: Nvidia’s 75.86% gross margin is nearly unheard of in the semiconductor industry, showing just how profitable its business remains.
Could Nvidia become the first $4 trillion stock? Given the long-term trends, it’s not out of the question. The sell-off may be painful now, but history has shown that dominant tech companies often bounce back stronger.
