Trump: Chinese AI DeepSeek a 'Wake-Up Call' for U.S. Tech After Nvidia's $600B Loss

Donald Trump has labeled the new Chinese artificial intelligence model, DeepSeek, as a significant "wake-up call" for the U.S. tech industry, following a dramatic $600 billion drop in Nvidia's market value. The unveiling of DeepSeek triggered a sharp decline in stocks of companies deeply involved in artificial intelligence. Nvidia, a leader in the GPU market crucial for AI operations, experienced the most severe impact with its shares plummeting by 16.86%—marking the largest single-day loss in Wall Street history.

Other tech giants were also affected, with Microsoft, Meta Platforms, and Google's parent company Alphabet seeing declines ranging from 2.1% to 4.2%. AI server manufacturer Dell Technologies saw an 8.7% drop in its stock value.

DeepSeek's R1 model claims to be a much more cost-effective alternative to Western AI models like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly requires significantly less computing power and was trained for an estimated $6 million. While these claims have faced some skepticism, DeepSeek has nonetheless prompted a reevaluation of the massive investments U.S. tech companies are making in AI, causing investor concerns. The model quickly became the most downloaded free app in the U.S., fueled by discussions about its potential effectiveness.

Sheldon Fernandez, co-founder of DarwinAI, highlighted DeepSeek's impact, stating to CBC News, "DeepSeek performs as well as the leading models in Silicon Valley and in some cases, according to their claims, even better. But they did it with a fractional amount of the resources, which is really what is turning heads in our industry. Instead of paying OpenAI $20 or $200 a month for the latest advanced versions of these models, people can now access similar features for free. This upends the business models that many companies relied on to justify their high valuations."

Despite the market turmoil, President Trump attempted to frame DeepSeek's emergence positively for the U.S. He remarked, as reported by the BBC, "Instead of spending billions and billions, you'll spend less and you'll come up with hopefully the same solution. If you could do it cheaper, if you could do it for less and get to the same end result, I think that's a good thing for us." Trump emphasized that the U.S. would continue to lead in AI development.

Despite the recent setbacks, Nvidia remains a powerhouse with a $2.90 trillion valuation. The company is poised to launch the highly anticipated RTX 5090 and RTX 5080 GPUs later this week, with eager customers braving the January cold to camp outside stores in anticipation.