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 significant drop in Nvidia's market value—nearly $600 billion. DeepSeek's emergence triggered a sharp decline in AI-related stocks. Nvidia, a major GPU supplier for AI models, suffered the most, experiencing a 16.86% share drop—a record on Wall Street. Microsoft, Meta Platforms, Alphabet, and Dell Technologies also saw declines ranging from 2.1% to 8.7%.

DeepSeek boasts that its R1 model offers a significantly cheaper alternative to Western counterparts like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly requires less computing power and was trained for an estimated $6 million. Although this claim is disputed by some, it has raised concerns about the billions invested by American tech companies in AI, unsettling investors. DeepSeek's popularity surged, topping U.S. free app download charts amidst growing discussions about its capabilities.

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 what's turning heads." He added that DeepSeek's free access undercuts the business models of companies justifying high valuations.

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 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 that the U.S. will retain its AI dominance.

Despite DeepSeek's impact, Nvidia remains a $2.90 trillion company. The company is poised to release its highly anticipated RTX 5090 and RTX 5080 GPUs later this week, generating significant consumer demand.