Former President 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 comes in the wake of Nvidia experiencing a staggering $600 billion drop in its market value. The launch of DeepSeek triggered a sharp decline in stocks of companies heavily invested in AI, with Nvidia suffering the most significant blow as its shares plummeted by 16.86%—marking the largest single-day loss in Wall Street history.
Other tech giants were also affected, with Microsoft, Meta Platforms, and Google's parent company Alphabet seeing declines ranging from 2.1% to 4.2%. Meanwhile, AI server manufacturer Dell Technologies saw its stock fall 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 for an estimated $6 million. While some dispute these claims, DeepSeek's impact has raised questions about the massive investments American tech companies are making in AI, causing investor unease. The model quickly rose to the top of the most downloaded free app chart in the U.S., fueled by discussions about its 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 get these types of features for free. This really upends the business model that many companies were relying on to justify their high valuations."
Despite the market turmoil, President Trump attempted to highlight a potential silver lining, suggesting that DeepSeek could be "a positive" for the U.S. He stated, as reported by 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 also expressed confidence that the U.S. would maintain its dominance in the AI field.
Despite the impact of DeepSeek, Nvidia remains a formidable player with a market value of $2.90 trillion. The company is set to release the highly anticipated RTX 5090 and RTX 5080 GPUs later this week, with eager customers braving the January cold to camp outside stores in anticipation of the launch.
