Donald Trump has highlighted the emergence of the Chinese artificial intelligence model, DeepSeek, as a significant "wake-up call" for the U.S. tech industry, following a dramatic $600 billion drop in Nvidia's market value.

The introduction of DeepSeek triggered a sharp decline in stocks across the AI sector, with Nvidia experiencing the most significant hit as its shares plummeted 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, saw declines ranging from 2.1% to 4.2%, while Dell Technologies, a key player in AI servers, dropped by 8.7%.

DeepSeek's R1 model positions itself as a cost-effective alternative to Western AI offerings like ChatGPT, built on the open-source DeepSeek-V3. This model reportedly requires significantly less computing power and was trained for an estimated $6 million—challenging the hefty investments made by American tech firms in AI development. Despite some skepticism about these claims, DeepSeek's impact has led to investor concerns and rapidly climbed to the top of the most downloaded free app chart in the U.S.

Sheldon Fernandez, co-founder of DarwinAI, emphasized DeepSeek's competitive edge to CBC News, stating, "[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 turning heads in our industry." He added that DeepSeek's model disrupts the business models of companies charging high fees for advanced AI features, offering similar capabilities for free.

Despite the market turmoil, President Trump attempted to frame DeepSeek's rise as potentially beneficial for the U.S., suggesting that cheaper AI solutions could lead to similar results without the massive financial outlay. "Instead of spending billions and billions, you'll spend less and you'll come up with hopefully the same solution," he remarked to the BBC. Trump also expressed confidence in the U.S.'s continued dominance in AI technology.

Nvidia, despite the recent setback, remains a formidable $2.90 trillion company and is poised to launch its highly anticipated RTX 5090 and RTX 5080 GPUs. The demand for these new graphics cards is so intense that enthusiasts are camping out in the January cold to secure their purchase.