Nvidia (NVDA, Financials) experienced a significant decline in its market capitalization, losing approximately $1 trillion since reaching a record high earlier this year.

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Nvidia stock was $107.70 as of March 10, 11:28 a.m. GMT-4; daily change was 4.99% and year to date change was 22.13%.

Chinese firm DeepSeek unveiled an improved artificial intelligence model, R1, in January 2025 that could run effectively on less and less powerful devices. This advancement called for a review of the current AI infrastructure, which made investors rethink the significant outlays of American tech behemoths invested in AI technology. As a result, Nvidia's shares fell around 17% in one day, wiping almost $589 billion in market valuethe worst one-day loss in American stock market history.

DeepSeek's affordable AI model generated questions over the future need for high-end artificial intelligence processors, which are fundamental to Nvidia's operations. This anxiety also affected the larger semiconductor sector as the PHLX Semiconductor Index dropped almost $1.04 trillion in market value since late January. With about $783 billion of this drop attributed to Nvidia, it is clear that it has major impact in the industry.

Though quarterly income has increased by 78%, Nvidia's projected drop in first-quarter margins has caused investor worries about possible expenditures in the AI sector. This attitude influenced suppliers including Taiwan Semiconductor Manufacturing Co. (TSM, Financials) and Samsung Electronics as it helped to cause a small decline in Nvidia's shares and a cautious reaction throughout Asian technology markets.

The significant market value drop of Nvidia indicates a convergence of elements including competitive challenges from developing artificial intelligence technology and more general market dynamics influencing the semiconductor sector.