Former U.S. President Donald Trump has described the emergence of DeepSeek, a new Chinese artificial intelligence model, as a “wake-up call” for the American tech industry following a dramatic stock market reaction that wiped nearly $600 billion from Nvidia’s valuation.

The release of DeepSeek triggered a sharp downturn in shares of companies heavily involved in AI development. Nvidia, the dominant supplier of GPUs used to train and run AI models, experienced a historic drop of 16.86%—the largest single-day loss ever recorded on Wall Street. Other major players including Microsoft, Meta Platforms, and Alphabet saw declines ranging between 2.1% and 4.2%, while Dell Technologies, an important player in AI server infrastructure, fell by 8.7%.

DeepSeek has created waves across the global AI landscape with its R1 model, which it claims offers performance comparable to leading Western models like ChatGPT at a fraction of the cost. Built upon the open-source DeepSeek-V3 framework, the model reportedly requires significantly less computational power and is believed to have been trained for only around $6 million—a stark contrast to the billions typically spent by U.S. firms.

While some experts remain skeptical about these figures, the impact of DeepSeek's arrival has raised serious questions about the massive investments being made by American tech giants into AI development. The ripple effect was enough to unsettle investors and trigger widespread concern over the sustainability of current business models.

“It performs as well as the leading models in Silicon Valley and in some cases, according to their claims, even better,” Sheldon Fernandez, co-founder of DarwinAI, told CBC News. “But they did it with a fractional amount of the resources—that’s really what is turning heads in our industry.”

He added, “Instead of paying Open $20 a month or $200 a month for the latest advanced versions of these models, people can really get these types of features for free. And so it really upends a lot of the business model that a lot of these companies were relying on to justify their very high valuations.”

Despite the disruption, former President Trump attempted to frame the situation in a positive light, suggesting that DeepSeek could be beneficial for the United States if it leads to more efficient innovation.

“Instead of spending billions and billions you’ll spend less and you’ll come up with hopefully the same solution,” he said, as reported by the BBC. “If you could do it cheaper, if you could do it for less and get to the same end result, I think that’s a good thing for us,” Trump added, reaffirming his belief that the U.S. will continue to lead in AI technology.

Meanwhile, despite the turbulence caused by DeepSeek’s rise, Nvidia remains a formidable force in the tech world with a market capitalization of $2.90 trillion. The company is set to unveil its highly anticipated RTX 5090 and RTX 5080 GPUs later this week, with eager consumers already lining up in the cold to get their hands on the next-generation hardware.