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Chip designer NVIDIA Corporation's shares shed more than $300 billion in value in premarket trading today as investors speculated about the implications of Chinese artificial intelligence startup DeepSeek being able to train models on par with their American counterparts at a lower budget. DeepSeek's R1 model made a splash earlier this month to quickly become the most downloaded application on Apple's AppStore over the weekend.
NVIDIA's shares were down by 11% in premarket trading as they joined peers from Japan and European chip equipment manufacturer ASML to report low single-digit percentage share price losses.
TSMC's Shares Up 1.34% in Taiwan Despite Global Chip Stock Bloodbath; Shed 10.6% On NYSE
Today's stock market selloff, which started soon after trading opened in Japan, affected data center stocks in the Asian country, the shares of chip manufacturing equipment provider ASML and NVIDIA. It was also reflected in the NASDAQ's futures and the VanEck Semiconductor ETF. ASML, which is highly exposed to the global semiconductor industry due to its status as the sole provider of advanced EUV chip manufacturing machines, saw its shares tumble by a whopping 11% in Europe ahead of its crucial earnings report due later this which will set the pace for 2025 AI expectations.
The stock had already bled 22% in October last year when the firm guided weak equipment demand for 2025 and caused investors to price out some of their AI-related demand expectations. ASML's ADRs that trade on the NASDAQ exchange are down by 11% in premarket trading to remove roughly $30 billion from its valuation. Over the past six months, the ADRs are down by 16% excluding today's premarket losses.
Japanese investment conglomerate Softbank, which sought to create headlines earlier this month through President Trump's $500 billion AI initiative, was down by 8.32% in Japanese markets. Chip testing equipment manufacturer Advantest also slid by 8.6%.
Yet, due to its massive market valuation that made it the most valuable company in the world last week, NVIDIA's market cap has taken the hardest hit from the DeepSeek fallout. Its shares have lost roughly 11% in premarket trading to wipe out a stunning ~$384 billion in value from where it last stood as trading closed last week. NVIDIA's shares traded in Germany are down by an even larger 11.7%.
After NVIDIA, one of the worst-hit chip stocks is semiconductor designer Broadcom. Its shares had soared by an unbelievable 38% in December when management shared that the firm expects to earn tens of billions of dollars through AI chip sales in 2027. However, as investors ponder whether the demand for AI chips will actually materialize given the currently held beliefs surrounding DeepSeek's training resources, they are fleeing Broadcom's stock in droves. Its shares are down by 10.5% in premarket trading to remove roughly $100 billion from its Friday valuation.
NVIDIA's smaller rival, AMD, is also down by 5.3% in the premarket. While AMD's products, namely its accelerators, are also suitable for AI workloads, NVIDIA's GPUs are the industry leaders and see the highest demand. British chip design house Arm Ltd, whose CEO Rene Haas insisted multiple times earlier this month that his firm's CPUs are alongside all AI GPUs, has shed 9.43%.
Other losers include Microsoft Corporation and Facebook's parent company, Meta. Their shares are down by 6% and 4.6% with investors pondering about the wisdom behind their multi-billion dollar capital expenditures. Shares of consumer technology giant Apple, which is only expected to benefit from consumer AI, are unfazed and have lost a mere 0.9% in premarket trading.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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