On the 27th of January, we witnessed the biggest wipeout for a single stock in the history of the US share market. Nvidia, the poster child of the artificial intelligence revolution, saw 17% of its market cap, almost USD 600 billion, vanish in a day. That’s a staggering figure, equivalent to a third of the market capitalisation of the entire ASX.

By now, you’re almost certainly familiar with the culprit: DeepSeek. DeepSeek is a Chinese AI startup, and over the weekend, it released its R1 large language model. R1’s accuracy isn’t unprecedented, but its computational efficiency looks groundbreaking. It largely met, and in some instances exceeded, the accuracy of its US-developed competitors. But it was trained for a fraction of the cost, and with inferior Nvidia chips.

This spooked Nvidia investors. If a model like R1 can achieve adequate performance with fewer, less-expensive chips, what does this mean for chip sales? Because there’s a lot of growth baked into the market’s valuation.

And can the chipmaking behemoth maintain its dominance if its cutting-edge technology isn’t as crucial as some first thought? Or, put another way, is Nvidia’s moat under threat?

In this issue of Your Money Weekly, we address these questions. We’ll walk through Morningstar’s view on Nvidia in the wake of the selloff, and lessons investors can take from this tumultuous week in markets.

We’ll also discuss the ASX-listed tech sector, including some of our top picks.

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