Chinese AI startup DeepSeek has sparked a historic sell-off in U.S. technology stocks after unveiling a cost-efficient AI development method.
President Donald Trump addressed the implications of the breakthrough during a speech at his Doral resort in Miami, calling it a “wakeup call” for American innovation.
The market turmoil was triggered by concerns that China’s DeepSeek could challenge U.S. dominance in generative AI at a fraction of the development cost.
Massive Tech Stock Sell-Off
The sell-off was immediate and severe:
- Nvidia shares plummeted by 17%, wiping out nearly $600 billion in market capitalization—the largest one-day loss for any publicly listed company.
- Broadcom fell over 17%, while the Nasdaq Composite dropped 3.1%.
- Microsoft and Alphabet lost more than 2.5% each, though Meta rose by 1.91%.
DeepSeek reportedly developed its large language model (LLM) for under $6 million, compared to OpenAI’s estimated $100 million cost for GPT-4.
Trump’s Unexpectedly Positive Take on DeepSeek’s Success
While addressing House Republicans, Trump praised the efficiency of DeepSeek’s AI development, suggesting it could benefit American companies by reducing costs.
“I’ve been reading about China and some of the companies in China, one in particular coming up with a faster and much less expensive AI method. That’s good because you don’t have to spend as much money,” Trump said. “I view that as a positive, as an asset.”
He emphasized America’s strength in innovation, stating, “We always have the ideas. We’re always first. So, instead of spending billions, you’ll spend less and come up with the same solution.”
Tech Giants Hit Hard
The market turbulence particularly impacted tech leaders with ties to Trump:
- Nvidia CEO Jensen Huang lost an estimated $20.7 billion in stock value.
- Tesla’s Elon Musk, Meta’s Mark Zuckerberg, Amazon’s Jeff Bezos, and Alphabet’s Sundar Pichai were also affected.
DeepSeek Surpasses ChatGPT
DeepSeek has become the most downloaded app in the U.S., challenging established AI leaders and reshaping perceptions around AI development costs.
Venture capitalist Marc Andreessen called DeepSeek “AI’s Sputnik moment,” while Microsoft CEO Satya Nadella described it as a transformative development in AI adoption.
Trump Plans Tariffs on Tech Manufacturing
In response to the AI disruption, Trump announced plans to impose tariffs on foreign production of computer chips, semiconductors, and pharmaceuticals to boost U.S. manufacturing.
“We’re going to be placing tariffs on foreign production to return essential goods manufacturing to the United States,” he said, adding that tariffs on steel, aluminum, and copper are also being considered.
What’s Next for the AI Race?
As DeepSeek disrupts the AI market, the relationship between Silicon Valley leaders and Trump’s administration is becoming increasingly complex.
Industry leaders and policymakers are bracing for further shifts as America grapples with China’s advancements in artificial intelligence.
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