Donald Trump has described China's new AI model DeepSeek as a "wake-up call" for U.S. tech companies after Nvidia lost nearly $600 billion in market value.
The launch of DeepSeek triggered a market selloff among AI-focused firms. Nvidia, the leading GPU supplier powering AI systems, suffered its worst single-day decline in Wall Street history with shares plummeting 16.86%.
Microsoft, Meta Platforms, and Alphabet (Google's parent company) dropped between 2.1% and 4.2%, while AI server manufacturer Dell Technologies saw an 8.7% decline.
DeepSeek positions its R1 model as a cost-efficient alternative to Western AI solutions like ChatGPT. Based on the open-source DeepSeek-V3 architecture, the platform reportedly operates with substantially lower computational demands and was developed with an estimated $6 million budget.
Although some analysts question these claims, DeepSeek has challenged the multibillion-dollar AI investments by American tech giants, causing investor concerns. The model quickly became the top free app in the U.S. amid growing discussions about its capabilities.
"DeepSeek matches performance with Silicon Valley's top models and occasionally surpasses them," DarwinAI co-founder Sheldon Fernandez told CBC News. "What's revolutionizing our industry is their ability to deliver comparable results with dramatically fewer resources."
"Rather than paying premium subscriptions for advanced AI models, users now access similar features free of charge. This fundamentally disrupts the business models justifying tech companies' valuations."
President Trump framed DeepSeek's emergence positively, suggesting potential benefits for the U.S. tech sector.
"Achieving comparable results with reduced expenditure could prove advantageous," Trump commented in his BBC interview.
"If we can maintain technological leadership while lowering costs, that strengthens America's position," Trump added, reaffirming U.S. dominance in AI development.
Despite recent setbacks, Nvidia maintains its $2.90 trillion valuation. The company prepares to launch its next-generation RTX 5090 and RTX 5080 GPUs this week, generating unprecedented consumer demand with enthusiasts queueing overnight.
