For two years, the belief that artificial intelligence (AI) would boost productivity has driven stock-market gains, with Nvidia, a leader in AI chip manufacturing, at the forefront.

However, this optimism turned sour after the release of DeepSeek, a Chinese AI model that rivaled OpenAI’s offerings but required less computing power, potentially reducing demand for Nvidia’s high-end chips.

This led to a massive drop in Nvidia’s stock by 17%, causing a broader tech sell-off and a $1 trillion market value loss, the Wall Street Journal has reported.

Investors had become overly bullish on AI, and the emergence of competition raised doubts about the sustainability of tech profits, leaving some to question the future of AI-driven growth.

Written by B.C. Begley