NEW YORK: The world’s 500 richest people, led by Nvidia Corp co-founder Jensen Huang, lost a combined US$108bil as a tech-led sell-off tied to Chinese artificial intelligence (AI) developer DeepSeek sent major indices plunging.
Billionaires whose fortunes are linked to AI were the biggest losers. Huang saw his fortune fall US$20.1bil, a 20% drop, while Oracle Corp co-founder Larry Ellison’s US$22.6bil loss was larger in absolute terms, but represented just 12% of his fortune, according to the Bloomberg Billionaires Index.
Dell Inc’s Michael Dell lost US$13bil, and Binance Holdings Ltd co-founder Changpeng “CZ” Zhao had US$12.1bil shaved off his wealth.
Tech sector titans as a group saw US$94bil of wealth evaporate – roughly 85% of the Bloomberg Index’s total decline. The Nasdaq Composite Index fell 3.1% and the S&P 500 dropped 1.5%.
Hangzhou-based DeepSeek has been developing AI models since 2023, but the company first came onto the radar of many Western investors last weekend as its free DeepSeek R1 chatbot app topped download charts worldwide.
So many new users piled in that DeepSeek struggled to keep the app online, suffering outages and forcing it to restrict signups to users with Chinese phone numbers.
DeepSeek’s dark horse entry into the AI race, which it said cost just US$5.6mil to develop, is a challenge to Silicon Valley’s narrative that massive capital spending is essential to developing the strongest models.
That delivered a serious blow to billionaires whose fortunes are tied to the Western AI supply chain that’s been the equities market’s biggest driver over the past two years.
Soaring valuations for so-called AI hyperscalers, including Meta Platforms Inc, Alphabet Inc and Microsoft Corp, have generated billions in wealth for their owners since OpenAI unveiled ChatGPT in November 2022.
These companies have for the most part operated on a similar playbook: Spend huge sums to develop and run AI systems by hoarding top-of-the-line semiconductors and the energy supplies needed to run them.
Meta chief executive officer Mark Zuckerberg announced last Friday that the company planned to spend US$60bil to US$65bil on projects related to AI this year, well above Wall Street estimates.
Capital spending across all Big Tech firms is on pace to reach US$200bil in 2025, according to a Bloomberg Intelligence report.
Despite limited revenue to show for all their investment so far, markets have rewarded US tech stocks with record-high valuations, which have in turn generated historic wealth gains for their owners.
Nvidia has stood out as the AI boom’s biggest single winner so far, with Huang’s networth increasing almost eight-fold to US$121bil since the start of 2023 through last Friday.
Zuckerberg’s fortune soared 385% to US$229bil over the same period and Amazon.com Inc’s Jeff Bezos gained 133% to US$254bil.
While Huang and Ellison suffered losses, other major tech billionaires’ fortunes escaped unscathed.
Zuckerberg’s net worth ended the day up, gaining US$4.3bil as Meta rebounded from an early-session decline. Bezos’ wealth climbed by about US$632mil.
The fact that DeepSeek was able to develop a free model that potentially rivals or beats competitors including ChatGPT and Anthropic’s Claude at a fraction of the development cost led investors to question the logic behind Silicon Valley’s dependence on capital spending. — Bloomberg