US Tech Giants on Alert as Chinese AI Surges

Donald Trump has labeled China's new AI model, DeepSeek, a "wake-up call" for the U.S. tech sector following a significant market downturn for Nvidia, which saw a nearly $600 billion drop in its market capitalization.

DeepSeek's emergence triggered a sharp decline in AI-focused company stocks. Nvidia, a major player in the GPU market crucial for AI model operation, suffered the most, experiencing a 16.86% share plunge—a record on Wall Street. Microsoft, Meta Platforms, Alphabet (Google's parent company), and Dell Technologies also experienced declines, ranging from 2.1% to 8.7%.

Although this claim has faced scrutiny, DeepSeek has raised questions about the massive AI investments made by American tech firms, unsettling investors. Its popularity surged, reaching the top of the U.S. free app download charts fueled by discussions regarding its efficacy.

Sheldon Fernandez, co-founder of DarwinAI, commented to CBC News, stating that DeepSeek "performs as well as, and in some cases better than, leading Silicon Valley models, but with a fraction of the resources." He further highlighted that DeepSeek's free accessibility disrupts the business models of companies relying on high subscription fees to justify their valuations.

President Trump, however, offered a more optimistic perspective, suggesting DeepSeek could be beneficial for the U.S. by reducing the substantial costs associated with AI development while potentially achieving similar results. He emphasized the U.S.'s continued dominance in the AI field.

Despite DeepSeek's impact, Nvidia remains a substantial $2.90 trillion company. The company is poised to release its highly anticipated RTX 5090 and RTX 5080 GPUs later this week, generating considerable consumer demand, as evidenced by individuals braving cold weather to camp outside stores for purchase opportunities.