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Donald Trump has described the emergence of the new Chinese artificial intelligence model, DeepSeek, as a "wake-up call" for the U.S. tech industry. This statement comes in the wake of Nvidia experiencing a staggering $600 billion drop in its market value.
The launch of DeepSeek triggered a significant downturn in the stocks of companies deeply invested in artificial intelligence. Nvidia, a leader in the GPU market essential for AI operations, saw its shares plummet 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 faced declines ranging from 2.1% to 4.2%, while AI server manufacturer Dell Technologies dropped by 8.7%.
DeepSeek's R1 model is touted 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 impact has raised questions about the massive investments U.S. tech companies are making in AI, causing investor unease. The model quickly became the most downloaded free app 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, 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 frame DeepSeek's emergence positively 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 said, 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, emphasizing that the U.S. will continue to lead in AI development.
Despite the impact of DeepSeek, Nvidia remains a formidable player with a market value of $2.90 trillion. The company is set to launch the highly anticipated RTX 5090 and RTX 5080 GPUs later this week, with eager consumers braving the January cold to camp outside stores in anticipation.
