Why Nvidia Stock Is Plummeting Today

Shares of Nvidia (NASDAQ: NVDA) were sinking Wednesday. The company's stock fell 6.2% as of 2:20 p.m. ET, but lost as much as 6.9% earlier in the day. The move comes as the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) lost 0.8% and 1.1%, respectively.

The artificial intelligence (AI) superstar continues to struggle in the wake of the release of DeepSeek. Now, the release of another Chinese entrant is stoking fears that the U.S. is lagging behind.

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DeepSeek spooks the market

Shares of Nvidia have been on a roller coaster this week after the latest version of DeepSeek -- an AI app from a Chinese start-up -- was released. The model was trained for a small fraction of the cost of its U.S. counterparts and, critically for Nvidia, without the use of Nvidia's best chips. Investors are wary that this will mean demand will cool for the company's chips.

The release also sparked fears that the U.S. would fall behind, with tech investor Marc Andreessen calling it a "Sputnik moment." Alibaba (NYSE: BABA) did little to help allay those fears today when it announced the release of its latest AI, Qwen 2.5-Max. The company claims the model is more powerful than DeepSeek's.

Key earnings are this week

Nvidia's stock is also likely being held down as investors wait to see numbers from key Nvidia partners like Meta Platforms and Microsoft, both of which report their earnings after the market closes today. The earnings calls could reveal much as to how the hyperscalers -- the companies that build and operate the massive data centers that power AI and drive Nvidia sales -- view the AI offerings coming from China, what they mean for the industry, and most critically, if they are altering their spending plans.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Alibaba Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.