Donald Trump has highlighted the emergence of the Chinese artificial intelligence model DeepSeek as a critical "wake-up call" for the U.S. tech industry, following a significant drop in Nvidia's market value by nearly $600 billion. This reaction was triggered by DeepSeek's impact on the stock market, causing a sharp decline in shares of companies heavily invested in AI technologies.
Nvidia, a leader in the GPU market essential for running AI models, experienced the most significant loss, with its shares plummeting 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 their stocks fall between 2.1% and 4.2%, while AI server manufacturer Dell Technologies dropped by 8.7%.
DeepSeek has sent shockwaves throughout the AI industry. Photo by NICOLAS TUCAT/AFP via Getty Images.
DeepSeek's R1 model is promoted as a cost-effective alternative to Western AI offerings like ChatGPT. Built on the open-source DeepSeek-V3, this model reportedly demands less computing power and was trained at a fraction of the cost—estimated at just $6 million. Although these claims have faced scrutiny, DeepSeek's emergence has raised questions about the substantial investments American tech companies are making in AI, causing investor unease. This model quickly climbed to the top of the most downloaded free apps in the U.S., fueled by discussions about its effectiveness.
Sheldon Fernandez, co-founder of DarwinAI, commented on DeepSeek's impact 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 for expensive subscriptions, users can access these features for free, disrupting the business models that justified high valuations for many companies."
Despite the market turmoil, President Trump attempted to frame DeepSeek's rise in a positive light for the U.S., suggesting it could lead to more cost-effective solutions in AI development. "Instead of spending billions and billions, you'll spend less and you'll come up with hopefully the same solution," he told the BBC. Trump emphasized the potential benefits of achieving similar results at a lower cost, while affirming his belief in continued U.S. dominance in AI.
Despite the impact of DeepSeek, Nvidia remains a formidable player with a valuation of $2.90 trillion. The company is gearing up to launch the much-anticipated RTX 5090 and RTX 5080 GPUs later this week, with enthusiasts so eager that they're camping out in the cold to secure these new products.
