Marvell Technology (MRVL) stock experienced a 5.98% plunge in the 24 hours leading up to the pre-market session on Sunday, January 26, 2025. The sell-off was primarily driven by concerns over the potential impact of China's DeepSeek lab releasing a powerful AI model at a relatively low cost, which could undermine demand for high-end AI chips and other hardware.

According to reports, DeepSeek claims to have built a powerful AI model using less expensive chips, costing only $6 million to develop. If this claim holds true, it could pose a significant challenge to semiconductor companies like Marvell, which produce advanced and costly chips for AI applications.

The news rattled the broader technology sector, with other chip stocks, quantum computing companies, nuclear energy firms, and crypto-related shares also experiencing declines in overnight trading. Investors appear wary that DeepSeek's purported breakthrough could disrupt the demand dynamics for expensive AI hardware, potentially impacting the revenue streams and growth prospects of companies in these sectors.