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On January 27, 2025, NVIDIA shares fell 16.9% and the Nasdaq Composite dropped 3.1% as investors reacted to the rise of DeepSeek, a Chinese AI company whose model was seen as a potential lower-cost competitor. Reuters reported NVIDIA lost nearly $593 billion in market capitalization that day—not $400 billion. The selloff reflected market concerns, not proof that DeepSeek alone caused the decline or would permanently reduce demand for NVIDIA hardware.
What happened to NVIDIA and the Nasdaq on January 27, 2025?
The market move was sharp but concentrated in technology and AI-related stocks. The Associated Press reported that NVIDIA fell 16.9% for the session and the Nasdaq Composite fell 3.1%. By comparison, the S&P 500 declined 1.5%, while the Dow Jones Industrial Average rose 0.7% and most U.S. stocks advanced. That contrast suggests the day was not a broad decline across the entire market; losses were focused in areas exposed to investor concerns about AI competition. Associated Press report, January 27, 2025.
Why the headline’s $400 billion figure is inaccurate
The $400 billion figure does not match the cited reporting for the January 27 session. Reuters, in a report carried by Kitco on January 28, put NVIDIA’s market-capitalization loss at nearly $593 billion and its share-price decline at 17%. Reuters described it as the largest one-day loss in market value at that time. The AP’s 16.9% figure is a separately reported rounded share decline; the two reports are consistent on the scale and direction of the move, though they use different percentage precision. Reuters via Kitco, January 28, 2025.
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Market capitalization is the market price of a company’s outstanding shares multiplied by the number of shares. A roughly $593 billion reduction in that measure does not mean that $593 billion in cash was withdrawn from NVIDIA or that the company had settled a permanent loss of business value. It records how the market repriced the shares during that session.
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Why investors reacted to DeepSeek
Contemporary coverage linked the selloff to concern that DeepSeek could produce competitive AI at a fraction of the cost associated with leading U.S. models. Investors questioned whether cheaper or more efficient AI development could challenge the assumptions supporting the high valuations of AI leaders and the suppliers—including NVIDIA—whose chips and networking equipment power AI systems. AP characterized DeepSeek’s model as potentially competitive at much lower cost, while Reuters described investor questions about the dominance of AI leaders and suppliers. These reports explain the market narrative; they do not establish DeepSeek as the sole cause of the decline or demonstrate a lasting reduction in NVIDIA’s chip demand.
Why the effect on NVIDIA’s hardware demand was contested
An NVIDIA spokesperson told Axios that DeepSeek was “an excellent AI advancement and a perfect example of Test Time Scaling.” The company said DeepSeek’s work showed how new models could be created using that technique and widely available models and compute it characterized as fully export-control compliant. The spokesperson also argued that inference—the process of running a trained model to produce results—still “requires significant numbers of NVIDIA GPUs and high-performance networking.” Those are NVIDIA’s claims about the technology and its products, not an independent finding that settles how much hardware future AI systems will need. Axios, January 27, 2025.
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Contemporaneous observers also emphasized uncertainty. AP quoted Wedbush Securities analyst Dan Ives saying it remained to be seen whether DeepSeek had found a way around chip restrictions and what chips it ultimately used; he noted that skeptics would have questions because the information came from China. That was an analyst’s comment on unresolved questions, not confirmation of DeepSeek’s hardware. Axios quoted Morningstar chief U.S. market strategist Dave Sekera describing the trading as “People are selling first and will ask questions later,” an interpretation of investor behavior rather than a measured explanation for every trade.
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How quickly did the selloff reverse?
The decline partly reversed the next morning. Reuters reported NVIDIA shares up about 2.5% in early trading on January 28, 2025, and the Nasdaq up more than 1%. Those are early-session observations, not closing figures for January 28, so they should not be treated as a full-day recovery measure. The rebound illustrates how quickly sentiment can shift; it does not by itself resolve the longer-term questions about competition, AI spending, or NVIDIA’s business.
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What export controls do—and do not—explain
NVIDIA’s FY2025 Form 10-K, covering the fiscal year ended January 26, 2025, said U.S. export controls had harmed the company’s competitive position and that further changes could affect future results. It lists products subject to worldwide licensing requirements, including A100, A800, H100, H200, H800, B100, B200, GB200, L4, L40S, and RTX 6000 Ada, subject to exceptions and applicable classifications. The filing also discusses risks to sales in China and other markets. These disclosures establish that export controls were a business risk NVIDIA identified; they do not show that export controls caused the January 27 selloff or describe the rules currently in force. NVIDIA FY2025 Form 10-K.
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What the episode tells readers—and what it does not
- Documented move: On January 27, 2025, AP reported NVIDIA down 16.9% and the Nasdaq Composite down 3.1%; Reuters reported a nearly $593 billion loss in NVIDIA market value.
- Market explanation: Investors reacted to the possibility that DeepSeek could make AI development more cost-efficient and challenge assumptions about established AI companies and their suppliers.
- Unresolved business question: Lower-cost or more efficient models might change the economics of AI, but the cited coverage does not establish that they will permanently reduce demand for NVIDIA GPUs or networking.
- Historical scope: These reports explain the January 2025 event. They do not establish NVIDIA’s share price, valuation, or investment outlook in October 2026.
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