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 decline in the stocks of companies heavily invested in AI, with Nvidia bearing the brunt of the impact as its shares plummeted by 16.86%—marking the largest single-day loss in Wall Street history.
Other tech giants such as Microsoft, Meta Platforms, and Google's parent company, Alphabet, saw their stocks decrease between 2.1% and 4.2%, while AI server manufacturer Dell Technologies experienced an 8.7% drop. The ripple effect of DeepSeek's introduction has sent shockwaves through the AI industry, challenging the established players.
DeepSeek positions its R1 model 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 cost of just $6 million. While some dispute these claims, DeepSeek's impact has raised questions about the hefty investments American tech companies are making in AI, leading to investor unease. The model quickly surged to the top of the most downloaded free app chart in the U.S., fueled by discussions about its performance.
Sheldon Fernandez, co-founder of DarwinAI, highlighted DeepSeek's efficiency to CBC News, stating, "[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." He further noted that DeepSeek's model offers advanced features for free, disrupting the business models of companies charging high subscription fees for similar services.
Despite the market turmoil, President Trump sees potential benefits in DeepSeek's approach. "Instead of spending billions and billions, you'll spend less and you'll come up with hopefully the same solution," he told the BBC. Trump believes that achieving similar results at a lower cost could be advantageous for the U.S., maintaining confidence in the country's continued dominance in AI technology.
Nvidia, despite its recent setbacks, remains a formidable $2.90 trillion company. The anticipation around its upcoming RTX 5090 and RTX 5080 GPUs is palpable, with enthusiasts reportedly camping outside stores in the January cold to secure these highly sought-after cards.
