Trump Labels Chinese AI DeepSeek a 'Wake-Up Call' for U.S. Tech After Nvidia's $600B Loss

Donald Trump has labeled the emergence of the new Chinese artificial intelligence model, DeepSeek, as a "wake-up call" for the U.S. tech industry, particularly after Nvidia experienced a staggering $600 billion drop in its market value.

The launch of DeepSeek triggered a sharp decline in stocks of companies deeply invested in artificial intelligence. Nvidia, a leading supplier of GPUs critical for running AI models, saw its shares plummet by 16.86%, marking the largest single-day loss in Wall Street history. Other major players like Microsoft, Meta Platforms, and Alphabet experienced drops ranging from 2.1% to 4.2%, while Dell Technologies, an AI server maker, saw an 8.7% decrease.

DeepSeek's R1 model positions itself as a cost-effective alternative to Western AI solutions like ChatGPT. Built on the open-source DeepSeek-V3, it purportedly uses significantly less computing power and was trained at a reported cost of just $6 million. Although some challenge these claims, DeepSeek's impact has led to scrutiny over the massive investments American tech giants are making in AI, causing investor jitters. The model quickly rose to the top of the most downloaded free app chart in the U.S., fueled by discussions about its effectiveness.

"[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 is really what is 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 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," Trump added, expressing confidence in continued U.S. dominance in AI.

Nvidia, despite the recent setback, remains a formidable $2.90 trillion company. It is gearing up to launch the highly anticipated RTX 5090 and RTX 5080 GPUs later this week, with eager customers braving the January cold to camp outside stores in anticipation.