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Last week, AI stocks were basking in the glow of an announcement by the Trump Administration and leading tech companies to invest $500 billion into Project Stargate, an initiative to build the necessary infrastructure to extend America’s lead in artificial intelligence.
However, DeepSeek, a China-based app using open source technology, is purportedly able to perform as well as OpenAI’s ChatGPT at a fraction of the cost. Chipmakers and energy companies that were counting on demand for more expensive chips and greater demand for energy to spur growth may have to prepare for a marketplace with low-cost alternatives.
After hitting an all-time high last week, shares of Nvidia (Nasdaq: NVDA) tumbled on Monday and lost almost $600 billion in market capitalization, the biggest one-day loss in U.S. stock market history. Nvidia CEO Jensen Huang, the company’s biggest individual shareholder, saw paper losses of $20 billion.
Shares of Oracle (NYSE: ORCL) lost 13% on Monday. Oracle is one of the partners for Project Stargate.
The selloff also weighed on chipmaker Broadcom (Nasdaq: AVGO) on Monday, but most tech stocks were recovering Tuesday morning.
