Donald Trump has described China's new DeepSeek AI model as a "wake-up call" for U.S. tech companies following Nvidia's staggering $600 billion market value loss.
The launch of DeepSeek triggered dramatic stock declines across AI-focused firms. Nvidia - the dominant GPU supplier powering AI systems - suffered the most severe blow with shares plummeting 16.86%, marking Wall Street's largest single-day drop.
Other tech giants weren't spared either: Microsoft, Meta Platforms, and Alphabet (Google's parent company) saw declines between 2.1% and 4.2%, while AI server manufacturer Dell Technologies dropped 8.7%.
DeepSeek positions its R1 model as a cost-effective alternative to Western AI solutions like ChatGPT. Built on the open-source DeepSeek-V3 framework, Chinese developers claim it requires substantially less computing power than comparable Western models, reportedly developed for merely $6 million.
While critics question these claims, DeepSeek has undoubtedly raised concerns about the massive AI investments made by American tech firms, triggering investor anxiety. The model's popularity surged rapidly, topping U.S. app store charts amid growing discussions about its capabilities.
"DeepSeek matches Silicon Valley's leading models in performance and potentially exceeds them in certain applications," DarwinAI co-founder Sheldon Fernandez told CBC News. "What's truly remarkable is they achieved this with dramatically fewer resources - that's what's capturing our industry's attention."
"Rather than paying $20-$200 monthly subscriptions for premium AI services elsewhere, DeepSeek offers comparable features at no cost. This fundamentally disrupts the business models underpinning many tech companies' high valuations," Fernandez added.
Former President Trump offered an optimistic perspective, suggesting DeepSeek might ultimately benefit American innovation. As reported by the BBC, he stated: "Rather than pouring in billions, this pushes us to achieve comparable results more efficiently."
"If we can attain similar outcomes with lower costs, I consider that advantageous," Trump continued, while reaffirming his belief in continued U.S. leadership in AI development.
Despite the recent volatility, Nvidia maintains a $2.9 trillion valuation. The company prepares to launch its next-generation RTX 5090 and RTX 5080 GPUs this week - hardware so anticipated that customers are already forming lines outside stores despite winter temperatures.
