Donald Trump has described the new Chinese artificial intelligence model, DeepSeek, as a "wake-up call" for the U.S. tech industry, especially following Nvidia's staggering $600 billion market value drop. The launch of DeepSeek triggered a significant sell-off in AI-related stocks, with Nvidia experiencing the largest single-day loss in Wall Street history at a 16.86% plummet. Other tech giants like Microsoft, Meta Platforms, and Alphabet saw declines ranging from 2.1% to 4.2%, while Dell Technologies, known for its AI servers, dropped by 8.7%.
DeepSeek's R1 model is marketed as a cost-effective alternative to Western AI offerings like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly requires significantly less computing power and was trained at an estimated cost of just $6 million. While some dispute these claims, DeepSeek's emergence has challenged the massive investments U.S. tech companies are making in AI, causing investor unease. The app's rapid rise to the top of the U.S. free app download charts reflects the growing conversation around its potential effectiveness.
Sheldon Fernandez, co-founder of DarwinAI, commented 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 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 turbulence, President Trump suggested that DeepSeek could be a "positive" development 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 stated to the BBC. He further emphasized the potential cost savings: "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 remains confident that the U.S. will continue to lead in AI innovation.
Despite the impact of DeepSeek, Nvidia remains a formidable player with a market value of $2.90 trillion. The company is poised to launch its highly anticipated RTX 5090 and RTX 5080 GPUs later this week, with eager consumers already lining up in the cold to secure these new releases.
