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 the new Chinese artificial intelligence model, DeepSeek, as a "wake-up call" for the U.S. tech industry, especially in light of Nvidia's staggering $600 billion market value drop. The launch of DeepSeek triggered a sharp decline in stocks of companies deeply involved in artificial intelligence, with Nvidia experiencing the most significant hit—a 16.86% plunge in its shares, marking the largest loss in Wall Street history.

Other tech giants were not spared, with Microsoft, Meta Platforms, and Google's parent company Alphabet seeing declines between 2.1% and 4.2%. AI server manufacturer Dell Technologies also faced an 8.7% drop.

DeepSeek's R1 model is touted as a cost-effective alternative to Western AI offerings like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly demands less computing power and was trained for an estimated $6 million, a fraction of what Western models require.

While some challenge DeepSeek's claims, its emergence has raised questions about the massive investments U.S. tech companies are making in AI, causing investor jitters. DeepSeek quickly climbed to the top of the most downloaded free app chart in the U.S., fueled by discussions about its potential.

"[DeepSeek] performs as well as the leading models in Silicon Valley and in some cases, according to their claims, even better," Sheldon Fernandez, co-founder of DarwinAI, told CBC News. "But they did it with a fractional amount of the resources, which is really what's turning heads in our industry.

"Instead of paying OpenAI $20 a month or $200 a month for the latest advanced versions of these models, [people] can really get these types of features for free. And so it really upends a lot of the business model that a lot of these companies were relying on to justify their very high valuations."

Despite the market turmoil, President Trump offered a positive perspective on DeepSeek, suggesting it could be beneficial for the U.S.

"Instead of spending billions and billions, you'll spend less and you'll come up with hopefully the same solution," he remarked, as reported by the BBC.

"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 added, expressing confidence in the U.S.'s continued dominance in AI.

Despite the impact of DeepSeek, Nvidia remains a powerhouse with a $2.90 trillion valuation. The company is poised to release the eagerly awaited RTX 5090 and RTX 5080 GPUs later this week, with enthusiasts braving the January cold to camp outside stores in anticipation.