Donald Trump has called China's new AI model, DeepSeek, a "wake-up call" for the U.S. tech industry, following a significant drop in Nvidia's market value—nearly $600 billion. DeepSeek's emergence triggered a sharp decline in the stock prices of AI-heavy companies. Nvidia, a dominant player in GPUs crucial for AI, suffered the most, experiencing a 16.86% plunge—a record on Wall Street. Microsoft, Meta Platforms, Alphabet, and Dell Technologies also saw declines ranging from 2.1% to 8.7%.
DeepSeek boasts that its R1 model is a significantly cheaper alternative to Western counterparts like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly demands far less computing power and was trained for an estimated $6 million. While this claim is debated, DeepSeek's impact has raised concerns about the billions invested by American tech companies in AI, unsettling investors. Its popularity surged, reaching the top of the U.S. most downloaded free app chart, 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—that's what's turning heads. Instead of paying OpenAI $20 or $200 a month for advanced models, people can get similar features for free. This fundamentally disrupts the business models many companies relied on to justify their high valuations."
President Trump offered a more optimistic perspective, suggesting DeepSeek could be beneficial for the U.S. "Instead of spending billions and billions, you'll spend less and hopefully achieve the same solution," he said, as reported by the BBC. He added, "If you can do it cheaper and get the same result, that's good for us," while maintaining that the U.S. will retain its AI dominance.
Despite DeepSeek's impact, Nvidia remains a $2.90 trillion company. The company is poised to release its highly anticipated RTX 5090 and RTX 5080 GPUs later this week, generating such high demand that consumers are braving the cold to camp outside stores.
