Zinger Key Points
- DeepSeek, a Chinese AI startup, just launched a new model challenging U.S. competitors, including Nvidia’s core business.
- Nvidia's stock dropped nearly 17.65%, taking along semiconductor stocks like Broadcom and Marvell Technology in the ride south.
- Get Pro-Level Earnings Insights Before the Market Moves
Exchange-traded funds, or ETFs, with leveraged exposure to chipmaker Nvidia NVDA experienced a dramatic Monday thanks to the debut of AI upstart DeepSeek.
- The GraniteShares 2x Long NVDA Daily ETF NVDL plunged 34.55% as of writing.
- Graniteshares 2x Short NVDA Daily ETF NVD, its leveraged inverse counterpart designed to profit from Nvidia’s losses, soared 34.69% at last check
- The ProShares Ultra Semiconductors ETF USD, which holds more than 40% of its assets in Nvidia, dropped by more than 27%
- More broadly, the Vanguard Information Technology Index Fund, where Nvidia is the second-largest holding at nearly 15% of the portfolio, shed 4.7%.
- The VistaShares Artificial Intelligence Supercycle ETF AIS, which has only 3% of its assets in Nvidia but holds other AI stocks, lost 8.43%.
These ETFs offer the potential for amplified profits at the cost of higher-than-usual fees of around 1% and greater volatility.
What Triggered The Selloff?
DeepSeek is the culprit. This Hangzhou, China-based AI startup launched a new model that poses a challenge to U.S. competitors, including Nvidia's core business.
DeepSeek's open-source AI model has already surpassed ChatGPT in downloads on Apple's app store, leaving the AI market in awe. Industry experts like venture capitalist Marc Andreessen called this moment a “Sputnik moment” for U.S. AI companies as this could be a ground-breaker in the AI space, reported Reuters.
The market's reaction was swift. Nvidia’s stock, a major player in the AI space, dropped nearly 17.65%, taking along semiconductor stocks like Broadcom AVGO and Marvell Technology MRVL in the ride south.
The iShares Semiconductor ETF SOXX, which tracks semiconductor stocks, also plummeted by 8.39%, experiencing its worst day since the pandemic-led selloff in March 2020.
As fear spread, investors flocked to safe-haven assets like U.S. Treasuries, leading to yields on the 10-year note dipping to a one-month low.
See Next:
Photo: Shutterstock
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
