US President Donald Trump described the launch of the low-cost Chinese AI model, DeepSeek, as a “wake-up call” for U.S. industries on Monday. This move sent shockwaves through the tech sector, causing a significant drop in tech shares. The emergence of DeepSeek highlighted the growing global competition in artificial intelligence.
U.S. Companies Must Compete to Win
Trump emphasized the need for U.S. industries to focus on innovation and stay ahead of the competition. He stated, “Hopefully, the release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser-focused on competing to win.” This comment underscored the urgency for U.S. companies to act swiftly.
Positive Side for Silicon Valley
Despite the challenges, Trump pointed out that the situation could have a positive effect on Silicon Valley. “I would say that could be a positive. So instead of spending billions and billions, you’ll spend less, and you’ll come up with hopefully the same solution,” he said. This shift could push the industry to find cost-effective solutions.
DeepSeek Shakes Investor Confidence
The launch of DeepSeek, a new Chinese AI chatbot, shocked the market. It performed similarly to OpenAI’s ChatGPT but at a fraction of the cost. As a result, investors reacted by pulling back from U.S. tech stocks.
The Nasdaq Composite dropped 3.1%, with the index losing over $1 trillion at one point. Ultimately, it ended the week at $32.5 trillion. This drop signified the impact of DeepSeek’s emergence on investor confidence.
Major Losses for U.S. Tech Giants
Several major U.S. tech companies faced substantial losses. Nvidia, a key player in the AI semiconductor market, lost about $600 billion in market value. Furthermore, Apple surpassed Nvidia as the most valuable company in the U.S. after its shares dropped 17%.
In addition, Microsoft lost $7 billion, and Alphabet, Google’s parent company, saw a loss of $100 billion. Notably, Nvidia experienced the largest single-day stock market loss in U.S. history.
Trump’s Response and Future Plans
Trump’s comments come in the wake of these market shifts. Just one week after beginning his second term, he announced a $500 billion initiative to develop AI infrastructure in the U.S. This project, led by OpenAI and backed by Japan’s SoftBank, aims to strengthen the country’s position in the AI race.
