Major U.S. technology stocks — including Nvidia, Microsoft, and Tesla — lost a colossal $1 trillion market cap Monday on fears of disruption from an advanced artificial intelligence startup from China called DeepSeek.

Nvidia, which last year became the richest company in the world, saw 17% of its valuation, or $589 billion, erased — the largest one-day drop in market history, the New York Post reports.

That decline is more than the combined market value of home improvement giants Home Depot and Lowe's. Nvidia still carries a market value of about $2.9 trillion.

'AI'S SPUTNIK MOMENT'

Tech investor Marc Andreessen called the launch of DeepSeek, which claims to have developed advanced AI without access to sophisticated Nvidia chips, “AI’s Sputnik moment.”

“The DeepSeek announcement from China was nothing short of a financial Scud missile aimed at a U.S. market that is much more fragile than most will admit,” said Island Capital Investments CEO Anthony Esposito, referred to how artificial intelligence enthusiasm has driven markets to all-time highs.

The emergence of relatively lower-cost DeepSeek also drew attention to the immense sums being invested in AI by major U.S. companies, drawing scrutiny over efficiency and cost-effectiveness.

“Unfortunately, I see more downside to come in the coming months,” Esposito said.

Several of the other Magnificent 7 stocks — Apple, Alphabet, Tesla, Microsoft, Meta, and Amazon — were also hard hit by the global technology selloff.

Alphabet plunged more than 4%, Tesla sank 2%, and Microsoft, which has invested billions into OpenAI, lost 2%.

On Wednesday, President Trump announced a $500 billion joint venture for infrastructure tied to artificial intelligence by a new partnership, dubbed Stargate, formed by OpenAI, Oracle and SoftBank.

“DeepSeek clearly doesn’t have access to as much compute as U.S. hyperscalers, and somehow managed to develop a model that appears highly competitive,” Raymond James semiconductor analyst Srini Pajjuri wrote in a note Monday.

DEEPSEEK'S IMPACT

Monday’s decline in the S&P 500 tech sector was the biggest drop in the index since September 2020. Nvidia was one of eight stocks in the tech sector to post double-digit losses on the day. The decline for the index would have been worse if not for a gain of more than 3% in shares of Apple.

Oracle CEO Larry Ellison suffered a $27.6 billion decline in his net worth after the selloff, according to Forbes Real-Time Billionaires list. Ellison's net worth had jumped last week after Trump announced the Stargate partnership. Forbes says Ellison is still worth $200 billion.

Jensen Huang, CEO of Nvidia, saw his net worth drop $20.8 billion to $103.6 billion.

The 28.7% decline in Vistra Corp. stock on January 27, 2025 was the biggest drop for any stock in the S&P 500. Vistra isn’t a tech company — it’s an independent power producer. Its shares soared last year on expectations that the build out of AI infrastructure in the US. will require enormous amounts of power.

A number of stocks in the S&P 500 actually rose Monday. That the index dropped sharply on a day when better than three-fifths of its component stocks rose demonstrates the outsized influence of tech stocks such as Nvidia.

The Dow Jones Industrial Average, which has much less of an emphasis on tech than the S&P 500 and Nasdaq, closed with a modest gain.

A number of detractors slammed DeepSeek's ties to Communist China Monday, including the U.S. House of Representatives China Select Committee.

The committee posted on X that DeepSeek's chatbot says it is "designed to follow China's laws and regulations, as well as socialist core values."