Former President Trump labels China's DeepSeek AI model a "wake-up call" for the U.S. tech sector following Nvidia's significant market value decline. The introduction of DeepSeek triggered a sharp drop in AI-focused company stock prices. Nvidia, a leading GPU provider for AI, suffered the most substantial loss, experiencing a 16.86% share plunge – a record on Wall Street. Other tech giants like Microsoft, Meta, and Alphabet also experienced declines, ranging from 2.1% to 4.2%, while Dell Technologies saw an 8.7% drop.
DeepSeek's R1 model is marketed as a cost-effective alternative to Western AI offerings like ChatGPT. Leveraging the open-source DeepSeek-V3, it reportedly requires significantly less computing power and boasts a training cost estimated at just $6 million. Although this figure is contested, DeepSeek has raised questions about the massive investments made by American tech companies in AI, unsettling investors. The model's popularity is evident in its rapid ascent to the top of U.S. free app download charts.
Sheldon Fernandez, co-founder of DarwinAI, commented to CBC News, stating that DeepSeek's performance rivals leading Silicon Valley models, potentially even surpassing them in certain areas. He highlighted the stark contrast in resource allocation, emphasizing DeepSeek's significantly lower development costs. This, he argues, disrupts established business models used to justify high valuations.
Trump, however, offered a more optimistic perspective, suggesting DeepSeek could benefit the U.S. by potentially reducing development costs while achieving comparable results. He expressed confidence in the U.S.'s continued AI dominance.
Despite the impact of DeepSeek, Nvidia maintains a $2.90 trillion valuation. The company is poised to launch its highly anticipated RTX 5090 and RTX 5080 GPUs later this week, generating considerable consumer anticipation, as evidenced by lines forming outside stores in anticipation of the release.
