Chinese AI DeepSeek a 'Wake-Up Call' for U.S. Tech Firms, Donald Trump Says, After Nvidia’s World-Record $600 Billion Loss

Donald Trump has labeled China's new AI model, DeepSeek, a "wake-up call" for the U.S. tech sector following Nvidia's massive market value decline of nearly $600 billion.

DeepSeek's emergence triggered a sharp downturn in AI-focused company stocks. Nvidia, a leading GPU provider crucial for AI model operation, suffered the most significant blow, experiencing a 16.86% share plunge—a record on Wall Street. Microsoft, Meta Platforms, Alphabet (Google's parent company), and Dell Technologies also experienced declines ranging from 2.1% to 8.7%.

DeepSeek boasts its R1 model as a significantly more affordable alternative to Western counterparts like ChatGPT. Leveraging the open-source DeepSeek-V3, it reportedly demands less computing power and boasts a training cost estimated at just $6 million.

Although this claim faces some scrutiny, DeepSeek has prompted questions about the billions invested in AI by American tech giants, unnerving investors. Its popularity surged, topping U.S. free app download charts amidst growing discussions about its capabilities.

Sheldon Fernandez, DarwinAI co-founder, commented to CBC News, "DeepSeek performs comparably to leading Silicon Valley models, and in some instances, allegedly even better, but with a fraction of the resources. This is what's truly remarkable." He further emphasized the disruption to existing business models, stating, "Instead of monthly OpenAI subscriptions, users can access similar features for free, challenging the high valuations of many companies."

President Trump offered a more optimistic perspective, suggesting DeepSeek could be beneficial for the U.S. He stated (as reported by the BBC), "Instead of billions in spending, less will be needed, hopefully achieving the same results. Cheaper solutions leading to the same outcome are positive for us," while maintaining the U.S.'s continued AI dominance.

Despite DeepSeek's impact, Nvidia remains a $2.90 trillion company. The release of its highly anticipated RTX 5090 and RTX 5080 GPUs is imminent, generating such demand that consumers are braving winter weather to camp outside stores.