Trump Warns U.S. Tech: Chinese AI DeepSeek Sparks $600B Nvidia Loss

Former President Donald Trump has labeled 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 significant hit, with nearly $600 billion wiped off its market value.

The introduction of DeepSeek triggered a sharp decline in the stock prices of companies deeply invested in AI. Nvidia, a leader in the GPU market critical for AI applications, saw its shares plummet by 16.86%, marking the largest single-day loss in Wall Street history. Other tech giants like Microsoft, Meta Platforms, and Google's parent company Alphabet experienced drops ranging from 2.1% to 4.2%. AI server manufacturer Dell Technologies also saw its stock decrease by 8.7%.

DeepSeek has sent shockwaves throughout the AI gold rush. Photo by NICOLAS TUCAT/AFP via Getty Images.

DeepSeek's R1 model is promoted as a cost-effective alternative to Western AI offerings like ChatGPT. Built on the open-source DeepSeek-V3, it reportedly demands less computing power and was trained for an estimated $6 million. While some question these claims, DeepSeek has effectively challenged the massive investments U.S. tech companies are making in AI, causing investor unrest. The model quickly became the most downloaded free app in the U.S., fueled by discussions about its potential.

Sheldon Fernandez, co-founder of DarwinAI, commented to 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 a month 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."

Despite the market shakeup, President Trump attempted to frame DeepSeek's emergence positively for 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." Trump emphasized that the U.S. would continue to lead in AI development.

Despite the recent downturn, Nvidia remains a formidable $2.90 trillion company. It is poised to launch the highly anticipated RTX 5090 and RTX 5080 GPUs later this week, with eager customers braving the January cold to camp outside stores in anticipation.