Global markets faced a significant jolt as China’s AI powerhouse, DeepSeek, experienced a massive stock collapse, shaking investor confidence in the tech-heavy Nasdaq. Described as the worst trading day of 2025, the meltdown also impacted industry giants like Nvidia, which lost billions in market capitalisation.
According to Forbes, the trouble began when internal reports revealed discrepancies in DeepSeek’s growth forecasts and financial projections. Investors reacted swiftly, causing DeepSeek’s stock value to plummet by over 20%. The company’s AI-driven technologies, once seen as a revolutionary force in the tech sector, are now scrutinised for overpromising results.
As DeepSeek’s valuation spiralled downward, global leaders like Nvidia, a cornerstone of the AI revolution, suffered significant losses. Nvidia’s shares dropped by more than 10%, erasing $15 billion from its market value. The ripple effects were felt across the Nasdaq, which reported its sharpest single-day decline this year.
This setback has cast a shadow over the broader AI sector. Investors are now questioning the sustainability of current valuations in an industry that has long been considered invincible. Analysts believe this could mark a period of recalibration for tech stocks as market participants demand greater transparency and accountability.
DeepSeek’s crisis underscores the risks of unchecked growth and inflated expectations in emerging industries. While the AI sector remains a driver of innovation, this episode highlights the need for careful oversight and realistic financial projections.
With the Nasdaq reeling from the impact, experts closely monitor how AI firms will respond to increasing scrutiny. For now, the DeepSeek collapse stands as a cautionary tale for tech investors worldwide.