Trump Calls 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. This statement follows a significant drop in Nvidia's market value, which saw nearly $600 billion wiped off its shares.

The launch of DeepSeek triggered a sharp decline in stocks across companies deeply invested in artificial intelligence. Nvidia, a leader in the GPU market critical for AI operations, experienced the most substantial hit 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 saw declines ranging from 2.1% to 4.2%, while AI server manufacturer Dell Technologies dropped by 8.7%.

DeepSeek's R1 model is promoted as a cost-effective alternative to Western AI solutions like ChatGPT. Built on the open-source DeepSeek-V3, it allegedly requires significantly less computational power and was purportedly trained for just $6 million. While some question these claims, DeepSeek's impact has led investors to scrutinize the vast sums American tech firms are pouring into AI development. The model's popularity surged, propelling it to the top of the U.S. free app download charts amid discussions of its effectiveness.

Sheldon Fernandez, co-founder of DarwinAI, emphasized DeepSeek's impressive performance to CBC News: "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's turning heads in our industry."

Fernandez further noted the model's disruptive potential: "Instead of paying OpenAI $20 a month 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 of these companies were relying on to justify their high valuations."

Despite the market turmoil, President Trump attempted to frame DeepSeek's rise as a potential advantage for the U.S. He remarked to the BBC, "Instead of spending billions and billions, you'll spend less and you'll come up with hopefully the same solution. 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 expressed confidence in maintaining U.S. dominance in AI.

Nvidia, despite the recent setback, remains valued at $2.90 trillion and is poised to launch the much-anticipated RTX 5090 and RTX 5080 GPUs later this week. Enthusiasts are so eager for these new cards that they're enduring January's cold to camp outside stores.