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 called China's new AI model, DeepSeek, a "wake-up call" for the U.S. tech industry following a near-$600 billion drop in Nvidia's market value. DeepSeek's emergence triggered a sharp decline in AI-related stocks. Nvidia, a major GPU supplier for AI, suffered the most significant loss, with a 16.86% share drop—a record on Wall Street. Microsoft, Meta, Alphabet, and Dell Technologies also experienced declines ranging from 2.1% to 8.7%.

DeepSeek's R1 model is marketed as a significantly cheaper alternative to Western AI offerings like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly requires less computing power and was trained for an estimated $6 million. While this claim is debated, it has raised concerns about the billions invested by American tech companies in AI, unsettling investors. DeepSeek's popularity surged, reaching the top of the U.S. free app download charts, fueled by discussions about its effectiveness.

Sheldon Fernandez, co-founder of DarwinAI, told 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; that's really what is turning heads in our industry. Instead of paying OpenAI $20 or $200 a month…people can get these features for free. It really upends the business model many companies relied on to justify their high valuations."

President Trump offered a more optimistic perspective, suggesting DeepSeek could be beneficial to the U.S. He stated (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…and get to the same end result, I think that's a good thing for us," while maintaining his belief in continued U.S. AI dominance.

Despite DeepSeek's impact, Nvidia remains a $2.90 trillion company. The company's upcoming release of the RTX 5090 and RTX 5080 GPUs is highly anticipated, with customers already braving cold weather to camp outside stores.