Donald Trump has said the new Chinese artificial intelligence model DeepSeek should be considered a “wake-up call” for the U.S. tech industry after Nvidia saw almost $600 billion wiped off its market value.
The emergence of DeepSeek sent stocks in companies heavily invested in artificial intelligence into freefall. Nvidia, which dominates the market for GPUs upon which AI models run, was hit hardest when its shares tumbled 16.86% — the biggest loss in Wall Street history.
Microsoft, Meta Platforms, and Google parent Alphabet fell between 2.1% and 4.2%, while AI server maker Dell Technologies was down 8.7%.
DeepSeek claims its R1 model is a significantly cheaper alternative to western offerings such as ChatGPT. It’s built on the open source DeepSeek-V3, which reportedly requires far less computing power than western models and is estimated to have been trained for just $6 million.
While some have disputed this claim, DeepSeek has had the effect of calling into question the billions American tech companies are investing in AI, which in turn spooked investors. Indeed, DeepSeek shot to the top of the most downloaded free app chart in the U.S. off the back of rising discussion about its effectiveness.
“[DeepSeek] performs as well as the leading models in Silicon Valley and in some cases, according to their claims, even better,” Sheldon Fernandez, co-founder of DarwinAI, told CBC News. “But they did it with a fractional amount of the resources is really what is turning heads in our industry.
“Instead of paying Open $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.”
President Trump, however, tried to put a positive spin on recent events, suggesting DeepSeek may be “a positive” for the U.S.
“Instead of spending billions and billions you’ll spend less and you’ll come up with hopefully the same solution,” he said, as reported by the BBC.
“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 added before insisting the U.S. will remain dominant in the field of AI.
Nvidia, meanwhile, remains a $2.90 trillion company despite the impact of DeepSeek. It’s set to release the hotly anticipated RTX 5090 and RTX 5080 GPUs later this week, cards people are so desperate to buy they’re braving the January cold and camping outside shops.
Photo by NICOLAS TUCAT/AFP via Getty Images.
Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at [email protected] or confidentially at [email protected].
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