The world's 500 richest people, led by Nvidia Corp. Co-founder Jensen Huang, lost a total of $108 billion, as a tech-led selloff linked to Chinese AI developer DeepSeek sent major indices plummeting. Billionaires with fortunes linked to artificial intelligence were the biggest losers. According to the Bloomberg Billionaires Index, Huang's fortune dropped by 20%, or $20.1 billion, while Larry Ellison, a co-founder of Oracle Corp., suffered a larger loss of $22.6 billion, which accounted for only 12% of his fortune. Dell Inc.'s Michael Dell lost $13 billion, while Binance Holdings Ltd. co-founder Changpeng "CZ" Zhao lost $12.1 billion. As a group, tech titans lost $94 billion in wealth, accounting for roughly 85 percent of the total decline in the Bloomberg index. The Nasdaq Composite Index fell 3.1 percent, while the S&P 500 fell 1.5 percent.
DeepSeek, based in Hangzhou, has been developing AI models since 2023, but the company caught the attention of many Western investors this weekend when its free DeepSeek R1 chatbot app topped global download charts. DeepSeek struggled to keep the app online as new users flooded in, resulting in outages and forcing it to limit signups to users with Chinese phone numbers. DeepSeek's dark horse entry into the AI race, which the company claims cost only $5.6 million to develop, calls into question Silicon Valley's narrative that massive capital spending is required to develop the strongest models. That dealt a serious blow to billionaires whose fortunes are linked to the Western AI supply chain, which has been the primary driver of the equities market for the past two years.
Similar Playbook
Since OpenAI unveiled ChatGPT in November 2022, the valuations of so-called AI hyperscalers such as Meta Platforms Inc., Alphabet Inc., and Microsoft Corp. have skyrocketed, creating billions of dollars in wealth for their owners. These companies, for the most part, followed a similar playbook: Spend enormous sums to develop and run AI systems by hoarding top-of-the-line semiconductors and the energy supplies required.
Nvidia has emerged as the AI boom's biggest single winner thus far, with Huang's net worth increasing nearly eightfold to $121 billion from the beginning of 2023 to Friday. Zuckerberg's fortune increased 385 percent to $229 billion during the same period, while Amazon.com Inc.'s Jeff Bezos increased 133% to $254 billion.
While Huang and Ellison lost money, the fortunes of other major tech billionaires remained intact. Zuckerberg's net worth increased by $4.3 billion on the day as Meta recovered from an early-session decline. Bezos' wealth increased by approximately $632 million.
Capital Spending
The fact that DeepSeek was able to create a free model that could rival or outperform competitors such as ChatGPT and Anthropic's Claude for a fraction of the development cost prompted investors to question Silicon Valley's reliance on capital spending. A key reason why DeepSeek did not rely on large investments and cutting-edge chips to develop its model is that Chinese firms have had limited access to the powerful GPUs, or graphics processing units, that most Western companies rely on since the US government imposed strict export controls on advanced chips.
Alexandr Wang, CEO of Training Data Provider Scale AI, told CNBC last week that, despite export controls, DeepSeek and other Chinese developers may have more GPUs than Silicon Valley is aware of. "The Chinese labs have more H100s than people think," Wang explained, referring to Nvidia's flagship AI chip. "My understanding is that DeepSeek has about 50,000 H100s, which they can't talk about, obviously, because it's against the export controls that the US has in place."
