The recent AI advances by Chinese upstart DeepSeek could be the beginning of a potential nightmare scenario that Nvidia Corp. Chief Executive Jensen Huang has been worrying about since the chip maker’s meteoric rise.

US chip giant Nvidia suffered a record wipeout on Monday after Chinese startup DeepSeek upended the tech sector — and the rout cost its CEO Jensen Huang more than $20 billion in a single day. DeepSeek said it built its new AI model in just two months for less than $6 million – a fraction of the training costs of its US rivals – and without access to Nvidia’s powerful,

Despite the negative financial impact, Nvidia praised DeepSeek’s breakthrough. “DeepSeek is an excellent A.I. advancement and a perfect example of test time scaling,” a company spokesperson told Observer in a statement.

The market reaction proved particularly severe for Nvidia (NASDAQ: NVDA), with shares plummeting and erasing half a trillion in market cap at the time of this writing. To put this staggering figure in perspective,