Chinese startup DeepSeek has launched a new AI model that’s allegedly more powerful than similar offerings from the US titans but requires significantly less resources to operate.
The announcement resulted in a trillion-dollar hit to the US stock market, prompting even the President the comment.
Speaking at a retreat of House Republicans in Miami, Donald Trump dubbed the recent development a “wake-up call” for the American tech companies, adding “we need to be laser-focused on competing to win.”
Trump urges US tech firms to focus on innovation
DeepSeek’s new AI assistant has rapidly gained popularity in recent days – and even surpassed more established names like the ChatGPT in terms of total downloads on Apple devices.
The launch of its top-tier model at a significantly lower cost resulted in the biggest hit to Nvidia shares that crashed as much as 17% on Monday. The historic decline wiped nearly $600 billion off its market cap.
Severity of the market’s response reflected concerns that DeepSeek’s cost-efficient model could threaten the dominance of American tech companies in AI, prompting Donald Trump to urge them in his speech to step up their game and innovate to maintain their competitive advantage.
His call to action serves as a reminder that the global AI landscape is rapidly evolving, and staying ahead requires constant vigilance and adaptation.
Trump sees DeepSeek as a tailwind for AI at large
On Tuesday, the US President acknowledged the challenge posted by DeepSeek’s new AI assistant but highlighted the potential benefits of the low-cost model as well.
He’s convinced that cost-efficiency could prove to be advantageous for the artificial intelligence industry at large, allowing for significant advancements without the need for exorbitant spending.
But a switch to DeepSeek’s model to reap the cost benefits could reignite concerns of security and privacy implications of Chinese technology as well.
Note that shares of China-based DeepSeek are not currently available for the public to trade.
OpenAI, Nvidia hails DeepSeek for its achievement
OpenAI chief executive Sam Altman has already acknowledged DeepSeek’s achievements, stating its “R1” model is particularly impressive given its cost-effectiveness.
Jensen Huang of Nvidia had dubbed it an excellent AI advancement as well.
“DeepSeek’s work illustrates how new models can be created using that technique, leveraging widely-available models and compute that is fully export control compliant,” he added in a recent statement.
It’s worth mentioning that DeepSeek only used export compliant chips for its AI offering that questions if Nvidia’s high-end, super expensive chips are needed for powerful models in the first place.
But Wall Street stuck to its bullish ratings on NVDA today, suggesting concerns of a hit to demand and the related decline in the company’s share price is vastly overblown. Nvidia shares have started to recover in premarket on Tuesday.
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