US Tech Firms Face Wake-Up Call from Chinese AI Advancements

Former President Donald Trump has labeled China's new AI model, DeepSeek, a "wake-up call" for the U.S. tech sector following Nvidia's significant market value decline of nearly $600 billion.

DeepSeek's emergence triggered a sharp downturn in AI-focused company stocks. Nvidia, a major GPU provider for AI models, suffered the most substantial losses, experiencing a 16.86% share drop—a record on Wall Street. Microsoft, Meta Platforms, Alphabet (Google's parent company), and Dell Technologies also saw declines ranging from 2.1% to 8.7%.

Although this claim is disputed by some, DeepSeek has raised questions about the massive AI investments of American tech giants, unsettling investors. Its popularity surged, reaching the top of the U.S. free app download charts amidst growing discussions about its capabilities.

Sheldon Fernandez, co-founder of DarwinAI, commented to CBC News, stating that 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." He further highlighted the disruption to business models, noting the potential for free access to features previously requiring substantial monthly subscriptions.

Trump, however, offered a more optimistic perspective, suggesting DeepSeek could be beneficial for the U.S. by potentially reducing costs while achieving similar outcomes. He expressed confidence in the U.S.'s continued AI dominance.

Despite DeepSeek's impact, Nvidia remains a substantial $2.90 trillion company. The company is poised to launch its highly anticipated RTX 5090 and RTX 5080 GPUs later this week, generating significant consumer demand.