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 models, suffered the most, experiencing a 16.86% share plunge—a record loss on Wall Street. Microsoft, Meta, Alphabet, and Dell Technologies also saw significant decreases, 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. Although this claim is disputed by some, it has raised concerns about the billions invested by American tech companies in AI, impacting investor confidence. DeepSeek's popularity surged, reaching the top of the U.S. free app download charts amid growing discussions about its performance.

"DeepSeek performs as well as leading Silicon Valley models and, in some cases, even better," Sheldon Fernandez, co-founder of DarwinAI, told CBC News. "But they achieved this with a fraction of the resources, which is turning heads in our industry. Instead of paying OpenAI $20 or $200 monthly for advanced models, people can get similar features for free, disrupting the business models of many companies justifying their high valuations."

President Trump offered a more optimistic perspective, suggesting DeepSeek could be beneficial for the U.S. "Instead of spending billions, you'll spend less and hopefully achieve the same solution," he stated, according to the BBC. He added, "If you can do it cheaper and get the same result, that's good for us," while maintaining that the U.S. will remain an AI leader.

Despite DeepSeek's impact, Nvidia remains a $2.90 trillion company. The company is set to release its highly anticipated RTX 5090 and RTX 5080 GPUs later this week, generating significant consumer demand, with people already lining up outside stores.