Shares of Nvidia (NVDA) tumbled Monday after the release of a sophisticated artificial intelligence model from a Chinese startup prompted a reckoning on Wall Street regarding AI spending.

Chinese company DeepSeek last week released R1, an AI model that appears to rival the capabilities of models from U.S. tech giants like OpenAI and Google despite running on fewer, less powerful chips. U.S. investors began to take notice of the model late last week, and over the weekend started to worry about what it means for richly valued U.S. tech stocks. 

Nvidia’s earnings and stock price have soared in the past two years as tech giants like Microsoft (MSFT), Alphabet (GOOG)(GOOGL), and Amazon (AMZN) have spent massively on its AI systems. DeepSeek has led investors to question whether all that spending was necessary and, if not, why it would continue.

Nvidia stock was hammered by Monday’s sell-off. Shares tumbled more than 13% in recent trading, its largest intraday drop since a tech rout in August. At its deepest, Monday’s sell-off wiped nearly $480 billion from Nvidia’s market cap. 

What Analysts Were Saying

Wall Street analysts were mostly skeptical about DeepSeek and the sell-off it prompted, though their commentary often reflected uncertainty about the effects DeepSeek could have on the market.

Citi analysts expressed doubt that DeepSeek had achieved its results without the most advanced chips. They maintained their "buy" rating on Nvidia stock and said they don't expect major U.S. AI companies to move away from using its advanced GPUs.

Jefferies analysts, however, noted DeepSeek's success could press Silicon Valley management to "refocus on efficiency and ROI, meaning lower demand for computing power as of 2026."

Concern about future AI models requiring less computing power weighed on other high-flying AI stocks, including nuclear power providers Vistra (VST) and Constellation Energy Corp. (CEG), down 20% and 18%, respectively. Nvidia competitor Broadcom (AVGO) slumped more than 12%.