Last week, the Chinese company DeepSeek debuted a new AI model -- and overturned years of conventional wisdom about what it takes to build great AI. The shock unleashed a $1 trillion bloodbath on Wall Street. WSJ’s Stu Woo and WSJ’s Gunjan Banerji unpack DeepSeek's achievement and the market chaos it unleashed. Further Reading: -How China’s DeepSeek Outsmarted America -The Day DeepSeek Turned Tech and Wall Street Upside Down Further Listening: -The Company Behind Chat GPT -The Hidden Workforce That Helped Filter Violence and Abuse Out of ChatGPT Learn more about your ad choices. Visit megaphone.fm/adchoices
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So what was one of your first clues that Monday was going to be an interesting day?
Yeah, it's funny. I was actually commuting in from Long Island on Monday morning. I was on the Long Island Railroad and I looked at my phone. I was checking my emails, obviously checking the markets.
That's my colleague Gunjan Banerjee. She hosts WSJ's Take on the Week podcast and has covered markets and investing for the journal for years.
And I see that futures contracts tied to the Nasdaq composite were down more than 4%. which was really an eye-popping move. We had not seen a move of that magnitude in quite some time.
Something was going down in the stock market. And by the time Gunjan made it to the office, things had gotten even wilder.
I get to my desk and, you know, around the time the market opens at 9.30, I think everyone is kind of glued to their screens at that point. And they see that this really ugly day for the stock market is beginning. All three major indexes are down a bunch. NVIDIA, of course, is down double digits.
NVIDIA, the AI chip maker. Its stock was tanking.
We could be looking at the biggest drop in market cap on record here for NVIDIA when you take a look at the red across the screen, specifically the NASDAQ 100 futures and the...
So NVIDIA was down more than 10% shortly after the opening bell. It ended the day down 17%. And just to put that into context, that is a market value loss of almost $600 billion. So much money. Right. That is just an insane amount of wealth and amount of value that evaporated within hours. In fact, it is the biggest one-day market value drop on record.
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