WTF Is DeepSeek — And Will The Stock Market Chaos Affect Your Wallet?

If you follow the stock market, then you know all about the bogeyman scaring Wall Street right now: DeepSeek.

The Chinese ChatGPT competitor is currently the top-downloaded productivity app in the U.S. Apple app store. DeepSeek’s newest open-source model, R1, was released last week, and it is wowing the AI industry because it reportedly has advanced capabilities for a fraction of the price ― and without needing the same energy ― as U.S. companies like OpenAI and Google.

On Monday, Nvidia ― which largely makes the highly specialized, expensive chips that are powering the U.S. AI boom ― saw its shares plunge 17% in response to the news about DeepSeek’s AI model, causing the company to lose almost $600 billion in market value. It was the biggest one-day loss ever for a public company. Other AI-related stocks, including Broadcom, also saw their stocks slump by over 10% yesterday.

In other words, a huge sell-off of stock just happened.

This drop reflects “a sharp pullback in price because of an abundance of sellers,” explained Greg McBride, chief financial analyst at Bankrate.com.

“Stock prices are a reflection of future corporate earnings expectations. Anything that changes the assumptions in those earnings expectations can lead to a sharp correction in price,” he said. “In technology, the ever-present risk is that a competitor will come along with a better, cheaper or more efficient mousetrap and pose a threat to future earnings. When this happens, investors tend to sell first and ask questions later.”

Many investors are clearly panicking and making bets on the future of AI, but should you? HuffPost asked financial experts about what, if anything, you should be doing with your money ― regardless of what you have invested.

Some people are wondering if the sell-off of Nvidia (NVDA) stock makes it actually a good time to buy Nvidia stock, but financial experts advise against making any sudden changes.

“You should never respond to one-off changes in the stock market, and you should not be investing in individual stocks or worried about the changes in individual stocks,” warned University of Houston economist Dietrich Vollrath. “You should, as always, be invested in broad index funds with the lowest possible expense ratios.“

It’s easy to get swept up in the success stories of individual stocks paying off loans or houses, but here are some sobering facts: Only about 1% of investors are successful at timing the stock market. Remember GameStop’s quick rise and fall? YouTuber David Dobrik said he lost $85,000 investing in GameStop during its short-lived hype.

Ideally, you should diversify your investments so one stock’s financial losses do not crater or compound your own.

“Investors should aim at having a diversified portfolio and are usually better off not trying to time the market,” Gil Luria, head of technology research for financial services firm D.A. Davidson, said Tuesday. “NVDA shares declined yesterday because there are new concerns regarding their ability to continue to grow at the same rate as the last couple of years.”

And if you did invest solely in AI chip makers, use this stinging loss as your sign to spread your money around.

“Yesterday’s market moves also underscore the risks of being too heavily concentrated in a narrow sector of the market,” McBride said. “If you have too much of your wealth tied up in a handful of closely related stocks, it serves as a wake-up call to spread the money out and cushion against a sudden downdraft.”

Before you invest your housing payment in risky stocks, follow this basic financial advice: Make sure you have money set aside in your emergency savings, which ideally is three to six months of after-tax living expenses, so you always have money to fall back on. And do make clear financial goals, such as saving for retirement, so that your investment decisions are aligned with your risk appetite.

Although AI chip makers had a bad day Monday on Wall Street, they are already beginning to bounce back a day later. Instead of being reactive to the stock market going up or down a lot in one day, look at the big picture.

“Looking at trends over several years provides a more accurate picture, as markets can experience significant volatility within a single year. Over time, markets have a way of balancing out,” said Ramona Ortega, CEO and founder of WealthBuild, an AI-powered financial assistant. “There’s no exact timeline for when corrections will occur, but history shows they always do.”

Vollrath said what happened to Nvidia is a “reminder that the economy is not the stock market. This means essentially nothing for the economy, in terms of economic growth, interest rates or employment.“

Is Monday’s chip-maker sell-off an overreaction, or is DeepSeek’s low-cost breakthrough a fundamental shift to where the AI market is heading? It’s too soon to tell whether this will have larger repercussions for AI jobs and consumer spending, experts say.

“If we saw a prolonged plunge in the biggest, most widely held stocks that erases a meaningful chunk of the wealth created for investors, that could certainly weigh on consumer sentiment and spending,” McBride noted. “But we’re a long way from that.”

Or, as Vollrath put it, “the Nvidia C-suite people will likely have to take a slightly less fancy vacation this year. You and I will forget about this in a week.”