<div id="readability-page-1">Shares of Nvidia (NVDA 2.85%) suffered a double-digit decline in January, primarily due to the threat from Chinese artificial intelligence (AI) start-up DeepSeek. AI stocks plunged on Jan. 27 as investors reacted to the new chatbot DeepSeek R1 and DeepSeek's 22-page research paper that explained the engineering and technology behind the low-cost, open-source AI model. Among other things, DeepSeek claimed that it cost just $5.5 million to train the model, a tiny fraction of the billions that Nvidia's customers have paid for the components that run AI chatbots like ChatGPT. According to data from S&amp;P Global Market Intelligence, the stock finished the month down 11%. As you can see from the chart below, Nvidia was in the green for most of the month until the DeepSeek news sank the stock. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/b4e24542d856986eca644c779a7f4f7d.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1015" height="720" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/b4e24542d856986eca644c779a7f4f7d.png"/> ^SPX data by YCharts <h2>What the DeepSeek news means for Nvidia</h2> Nvidia stock dropped 17% on Monday, Jan. 27 in an unprecedented bloodbath in the AI sector. In fact, it was the worst single-day dollar-value loss for a single stock in history, as Nvidia gave up roughly $600 billion in market cap. The stock initially recouped some of those losses, but as of Feb. 3, it was trading below its closing price on Jan. 27 in part due to fears around tariffs. With the sell-off in Nvidia stock, investors are betting that DeepSeek's much cheaper architecture could dramatically change the economics across the industry, either causing demand for Nvidia's state-of-the-art components to fall or prices to crash as, according to that argument, there's no need to spend billions to do what DeepSeek could do for millions. It's still too early to know what the long-term impact of DeepSeek is, and there is some debate over how much of an advance its technology is. OpenAI accused the company of &#34;distilling&#34; its model, essentially using it to train its own model, meaning its work wasn't original. An Nvidia spokesperson did give DeepSeek credit for the achievement, calling it &#34;an excellent AI advancement.&#34; <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MDYzNzAvYWktc3F1YXJlLWNoaXAuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="393" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MDYzNzAvYWktc3F1YXJlLWNoaXAuanBnJnc9NzAw"/>Image source: Getty Images. </div> <h2>Is Nvidia a buy?</h2> Some analysts are skeptical that DeepSeek will significantly alter demand for Nvidia's chips or the current path in AI, noting that most American companies won't want to give their data to a Chinese start-up. However, the model is already being embraced in some corners. It's now available on Microsoft Azure, and Meta Platforms is seeking to apply DeepSeek's advances to its own AI models. At this point, it's too early to say what the long-term impact from DeepSeek is, but Nvidia is a resilient and adaptable company, and it can adjust to maintain its leadership in AI chips. Additionally, DeepSeek could accelerate demand for AI by making the technology cheaper. Overall, it's a mistake to write off Nvidia here, and the chip titan could be a beneficiary from the DeepSeek disruption in the long run. </div>

NVDA

Nvidia's stock fell 11% in January due to competition from Chinese AI start-up DeepSeek, which introduced a low-cost AI model. The stock experienced a historic drop of 17% on January 27, losing approximately $600 billion in market cap. While some analysts doubt DeepSeek's impact on Nvidia's chip demand, others believe it could lead to cheaper AI technology and increased demand. Nvidia remains a resilient company, potentially benefiting from the disruption in the long run.

- Nvidia shares experienced a significant decline in January, dropping 11% due to competition from the Chinese AI start-up DeepSeek, which introduced a low-cost AI model.  
- The stock suffered a historic loss of approximately $600 billion in market cap on January 27, raising concerns about the potential impact on demand for Nvidia's components.  
- While some analysts remain skeptical about DeepSeek's long-term effects, others suggest that Nvidia's adaptability may allow it to benefit from the disruption in the AI sector.

Why Nvidia Stock Lost 11% in January