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

Donald Trump has described the emergence of the Chinese artificial intelligence model DeepSeek as a "wake-up call" for the U.S. tech industry, following a significant drop in Nvidia's market value. Nvidia, a leader in the GPU market crucial for AI models, experienced a record-breaking 16.86% decline in its stock price, resulting in nearly $600 billion being wiped off its market value.

The launch of DeepSeek triggered a broader sell-off in AI-related stocks. Companies like Microsoft, Meta Platforms, and Google's parent company Alphabet saw their shares fall between 2.1% and 4.2%, while AI server manufacturer Dell Technologies dropped by 8.7%.

DeepSeek has sent shockwaves throughout the AI gold rush. Photo by NICOLAS TUCAT/AFP via Getty Images.

DeepSeek's R1 model is positioned as a more cost-effective alternative to Western AI offerings like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly requires significantly less computational power and was trained at an estimated cost of just $6 million. While these claims have faced scrutiny, DeepSeek's emergence has challenged the hefty investments American tech giants are making in AI, causing investor unease. The model quickly rose to the top of the U.S. free app download charts, fueled by discussions about its capabilities.

"[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 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 highlight a silver lining, suggesting DeepSeek could be "a positive" 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, while expressing confidence that the U.S. will maintain its dominance in AI.

Nvidia, despite the impact of DeepSeek, remains a formidable player with a market value of $2.90 trillion. The company is gearing up to release its highly anticipated RTX 5090 and RTX 5080 GPUs this week, with eager customers camping out in the January cold to secure these new products.