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According to technology experts, including venture capitalist Marc Andreessen, the emergence of "DeepSeek" despite being just a year old is seen as a "Sputnik moment" in the AI race, signaling a significant potential impact on American tech firms. The development comes after DeepSeek outpaced its U.S. competitor, ChatGPT, in downloads on Apple’s App Store, triggering sell-offs in shares of U.S. companies operating in the sector.
By midday Monday, Nvidia’s stock had plunged approximately 17%. At the same time, exchange-traded funds (ETFs) with high exposure to the company particularly those leveraging financial instruments suffered even steeper losses, according to Reuters.
The four ETFs that offer double the daily returns on Nvidia's stock were hit the hardest, tumbling 32.5%. Meanwhile, inverse leveraged funds designed to profit from Nvidia’s losses soared by 31%.
Other ETFs with substantial Nvidia exposure also saw significant declines. The ProShares Ultra Semiconductors ETF, which allocates over 40% of its assets to Nvidia and aims to double the performance of the Dow Jones U.S. Semiconductor Index, dropped 24.43% by midday.
Commenting on the market volatility, Brian Armour, an investment fund analyst at Morningstar, noted: “Such sharp price swings tend to attract speculative traders to single-stock ETFs. While some investors may step away from the risk after these losses, others will be eager to take their place.”