Short Sellers Rake in $9 Billion as DeepSeek Low-Cost AI Disrupts Nvidia and Other Tech Stocks

Short sellers of artificial intelligence (AI)-related stocks are celebrating massive profits after the debut of Chinese startup DeepSeek’s cost-effective AI models sent shockwaves through Wall Street. With Nvidia’s market value plummeting by a staggering $593 billion in a single day, traders betting against major AI companies like Nvidia, Broadcom, and Super Micro have cashed in big, with total profits surpassing $9 billion.
Record Profits for Short Sellers
Short sellers betting against Nvidia, the chipmaking giant at the center of the AI boom, saw an unprecedented windfall on Monday. According to data analytics firm Ortex, traders who had short positions on Nvidia earned about $6.6 billion in profits, marking the biggest single-day gain in the stock’s history.
The sharp drop in Nvidia’s stock, which lost 17% of its value following DeepSeek’s launch of its new AI models, was the largest one-day loss for any company ever, wiping out nearly $600 billion in market capitalization. DeepSeek’s low-cost models, which are reportedly comparable or even superior to those developed by U.S. rivals, raised doubts about the future demand for expensive AI infrastructure and hardware, further fueling the selloff.
Broadcom and Other AI Stocks Hit Hard
Broadcom, a major player in the semiconductor and AI sectors, also suffered a substantial hit. Short sellers targeting Broadcom made over $2 billion in profits as its stock slid sharply, mirroring the losses across the AI ecosystem. The reaction to DeepSeek’s innovations wasn’t limited to Nvidia and Broadcom—other AI-related companies such as server-maker Super Micro, data-center operator Equinix, and energy provider Vistra also experienced heavy losses, contributing to a combined total profit of over $900 million for short sellers betting against these firms.
DeepSeek’s Disruption and Investor Reactions
DeepSeek, a Chinese startup, has shaken the foundation of the AI market with its breakthrough in creating AI models that are reportedly on par with the leading models in the U.S., yet at a fraction of the cost. This development has sent investors scrambling to reassess the trajectory of AI investments, particularly in AI hardware and infrastructure.
As Nvidia, Broadcom, and others see their valuations take a hit, the impact of DeepSeek’s advancements could be far-reaching, with Wall Street’s expectations now being recalibrated to reflect a potentially less costly future for AI technology.
The massive profits made by short sellers on Monday highlight the volatility and uncertainty surrounding the AI market. The rise of low-cost AI models challenges the fundamental assumptions about the scale of investment required to support AI innovation, and as the market grapples with these questions, traders are quick to capitalize on the shifting landscape.
AI Sector Faces Increased Scrutiny
The fallout from DeepSeek’s success also underscores the growing debate about the sustainability of the AI boom. While some view the new, more affordable AI models as a positive development, others fear that the massive capital expenditures being made by companies like Nvidia, Broadcom, and others may not be as necessary as previously thought. Investors are now questioning whether the massive spending on AI infrastructure, chips, and energy will need to continue at the same pace, or whether the market is overinflated and heading for a correction.
In the wake of DeepSeek’s low-cost revolution, many investors are looking to short AI stocks, betting that the market may have gotten ahead of itself. With short sellers raking in billions and tech stocks facing intense pressure, the next few weeks will be critical for assessing the future of AI investment and whether the industry can continue its rapid growth or will face a slowdown.