What’s behind 108 billion dollar loss? DeepSeek’s AI revolution explained

The global AI boom has faced a significant setback as some of the wealthiest individuals, particularly those connected to artificial intelligence, collectively lost $108 billion. The financial blow has created ripples across Silicon Valley, with Nvidia's Jensen Huang losing a staggering $20.1 billion due to the rise of a low-cost AI model developed by Chinese AI company, DeepSeek.

Major losses among AI-linked billionaires

Billionaires heavily invested in AI bore the brunt of the losses. Jensen Huang, the co-founder of Nvidia, saw his net worth plummet by 20%, marking a $20.1 billion drop. Similarly, Oracle's co-founder Larry Ellison experienced a $22.6 billion loss, while Dell Inc.'s Michael Dell lost $13 billion. Binance co-founder Changpeng "CZ" Zhao also faced a $12.1 billion dip in his fortune.

These losses come as DeepSeek's free AI chatbot, DeepSeek R1, soared in global popularity, causing a sell-off in major tech stocks. The Nasdaq Composite Index dropped by 3.1%, while the S&P 500 fell 1.5%, wiping out billions in market value.

Tech sector hit hard

The tech sector faced a collective loss of $94 billion, accounting for 85% of the Bloomberg Billionaires Index’s decline. DeepSeek, headquartered in Hangzhou, has been developing AI models since 2023. Over the weekend, its chatbot app surged in downloads worldwide, overwhelming its infrastructure and forcing the company to restrict sign-ups to users with Chinese phone numbers.

The cost of AI development

Despite the losses, major tech companies continue to invest heavily in AI. Meta CEO Mark Zuckerberg announced plans to spend $60–65 billion on AI-related projects this year, exceeding Wall Street estimates. A Bloomberg Intelligence report forecasts capital expenditures across major tech firms will reach $200 billion by 2025.

Winners amidst the AI boom

Nvidia has emerged as one of the biggest beneficiaries of the AI surge. Jensen Huang’s net worth had increased eightfold in 2023 to $121 billion before the recent downturn. Similarly, Mark Zuckerberg’s wealth grew 385% this year to $229 billion, while Amazon's Jeff Bezos saw his fortune rise 133% to $254 billion.

The recent losses highlight the volatility of the AI sector and the immense risks tied to innovation. While setbacks like these are significant, the long-term potential of AI continues to attract heavy investments, with tech leaders doubling down on their bets despite the short-term market turbulence.