Chinese AI DeepSeek a 'Wake-Up Call' for U.S. Tech Firms, Donald Trump Says, After Nvidia’s World-Record $600 Billion Loss

Donald Trump has labeled China's new AI model, DeepSeek, a "wake-up call" for the U.S. tech sector following Nvidia's massive $600 billion market value plunge.

DeepSeek's debut triggered a sharp decline in AI-focused company stocks. Nvidia, a leading GPU provider crucial for AI model operation, suffered the most significant blow, experiencing a 16.86% share drop—a record on Wall Street. Microsoft, Meta Platforms, Alphabet (Google's parent company), and Dell Technologies also saw declines ranging from 2.1% to 8.7%.

While this claim faces some skepticism, DeepSeek has cast doubt on the billions invested by American tech companies in AI, unsettling investors. Its popularity surged, reaching the top of the U.S. free app download charts amid growing discussions about its performance.

"DeepSeek performs comparably to leading Silicon Valley models, and in some instances, even better, according to their claims," Sheldon Fernandez, DarwinAI co-founder, told CBC News. "The remarkable aspect is achieving this with a fraction of the resources."

Fernandez further highlighted the disruption to existing business models: "Instead of monthly subscriptions of $20 or $200 for advanced AI features, users can access similar capabilities for free. This fundamentally challenges the business models underpinning the high valuations of many companies."

President Trump, however, offered a more optimistic perspective, suggesting DeepSeek could be beneficial for the U.S. He stated (as reported by the BBC), "Instead of billions in spending, less will be needed to achieve similar results. If it's cheaper and yields the same outcome, that's positive for us," while maintaining that U.S. AI dominance will persist.

Despite DeepSeek's impact, Nvidia retains a $2.90 trillion valuation. 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 cold weather to camp outside stores.