DeepSeek’s AI Disruption Slashes Mining Giants’ Value by 30%

On January 28, 2025, Nvidia experienced an unprecedented 17% drop in stock value, wiping out roughly one trillion dollars in market capitalization. This dramatic decline was sparked by DeepSeek’s announcement of the “R1” AI model, a groundbreaking design that combines high performance with reduced computational demands. The announcement underscores the growing intensity of the price war between Nvidia and Huawei, where Nvidia is facing mounting challenges.

Read the full story in our article, “Nvidia Cuts AI Chip Prices for the Chinese Market”.

Nvidia Stock Crash Chart. Source: tradingview

Nvidia’s stock collapse set off a ripple effect that spread through the AI and cryptocurrency sectors. Mining companies Riot Platforms (RIOT) and Marathon Digital Holdings (MARA) suffered losses of 15.5% and 8.5%, respectively. Providers of high-performance computing for AI, such as TeraWulf (WULF) and Applied Digital Corporation (APLD), experienced even sharper drops, with stock prices falling by 30% and 27.7%.

The ripple effects reached European markets, where technology stocks bore the brunt of the sell-off. Nvidia shares dropped over 6% on the German Tradegate exchange. Meanwhile, Chinese companies involved in AI saw their stock prices climb, benefiting from the news.

Huawei Stock Growth Visualized. Source: cbonds

The launch of DeepSeek’s “R1” model has acted as a wake-up call, forcing investors to rethink the growth trajectory and demand dynamics within the AI sector. This new technology, which reduces the need for extensive infrastructure to train AI, has cast a shadow over the valuations of companies providing energy and infrastructure for these systems.

In this period of uncertainty, market players are keeping a close eye on future developments in AI and their potential financial implications. Attention is particularly focused on how these breakthroughs might reshape the demand for computing power and supporting resources.