Trump Calls Chinese AI a Wake-Up Call After Nvidia's $600B Loss

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 AI-focused company stocks. Nvidia, a major GPU supplier for AI models, suffered the most, experiencing a 16.86% share drop—a record on Wall Street. Microsoft, Meta Platforms, Alphabet, and Dell Technologies also saw declines ranging from 2.1% to 8.7%.

DeepSeek boasts its R1 model as a significantly cheaper alternative to Western counterparts like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly requires less computing power and cost an estimated $6 million to train—a claim disputed by some. However, DeepSeek's impact lies in questioning the massive investments American tech companies are making in AI, unnerving investors. Its rapid rise to the top of the U.S. free app download charts reflects growing interest in its capabilities.

Sheldon Fernandez, co-founder of DarwinAI, told 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 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."

President Trump offered a more optimistic perspective, suggesting DeepSeek could be beneficial to 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," while maintaining his belief in continued U.S. AI dominance.

Despite DeepSeek's impact, Nvidia remains a $2.90 trillion company. The company's upcoming release of the RTX 5090 and RTX 5080 GPUs is highly anticipated, with customers braving winter weather to camp outside stores for a chance to purchase them.