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 described the emergence of the new Chinese artificial intelligence model, DeepSeek, as a "wake-up call" for the U.S. tech industry. This statement comes in the wake of Nvidia experiencing a staggering $600 billion drop in its market value.

The launch of DeepSeek triggered a significant downturn in stocks of companies deeply invested in AI technology. Nvidia, a leader in the GPU market essential for AI operations, saw its shares plummet by 16.86%, marking the largest single-day loss in Wall Street history. Other tech giants like Microsoft, Meta Platforms, and Google's parent company Alphabet also saw declines ranging from 2.1% to 4.2%, while Dell Technologies, a key player in AI servers, dropped by 8.7%.

DeepSeek's R1 model is touted as a 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 at an estimated cost of just $6 million. While some question these claims, DeepSeek's impact has led to scrutiny of the massive investments U.S. tech companies are making in AI, causing investor unease. The model quickly became the most downloaded free app in the U.S., fueled by discussions about its effectiveness.

Sheldon Fernandez, co-founder of DarwinAI, highlighted DeepSeek's efficiency to CBC News, stating, "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 get these types of features for free. This really upends the business model that many companies were relying on to justify their high valuations."

Despite the market turmoil, President Trump attempted to frame DeepSeek's emergence positively, suggesting it could benefit the U.S. "Instead of spending billions and billions, you'll spend less and you'll come up with hopefully the same solution," he told 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," he added, while expressing confidence in the U.S.'s continued dominance in AI.

Despite the impact of DeepSeek, Nvidia remains a formidable $2.90 trillion company. It is poised to launch the highly anticipated RTX 5090 and RTX 5080 GPUs later this week, with eager consumers braving the January cold to camp outside stores in anticipation.