Trump says DeepSeek should be a 'wake-up call' for US tech titans

By NATASHA ANDERSON

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President Donald Trump has branded Chinese AI startup DeepSeek as a 'wake-up call' for US tech titans after fears of upheaval in the AI gold rush rocked Wall Street. The new Chinese chatbot launched last week and quickly overtook its rival ChatGPT to become the downloaded free app on Apple's US App Store. What truly rattled the tech industry, however, was DeepSeek's claim that it developed its latest model - the R1 - at a fraction of the cost that major companies are investing in AI development. The news sent shockwaves through the tech sector, sparking concerns that the US may not be the dominant market leader in AI as many thought it to be.

President Donald Trump has branded Chinese AI startup DeepSeek as a 'wake-up call' for US tech titans after fears of upheaval in the AI gold rush rocked Wall Street. The new Chinese chatbot launched last week and quickly overtook its rival ChatGPT to become the downloaded free app on Apple's US App Store. What truly rattled the tech industry, however, was DeepSeek's claim that it developed its latest model - the R1 - at a fraction of the cost that major companies are investing in AI development. The news sent shockwaves through the tech sector, sparking concerns that the US may not be the dominant market leader in AI as many thought it to be.

DeepSeek's arrival destabilized the AI market and caused the US stock market to hemorrhage $1 trillion on Monday. But Trump reacted quickly, saying the chatbot's release 'should be a wake-up call for our industries that we need to be laser-focused on competing to win.' He argued it could be a 'positive' for US tech giants, adding: 'Instead of spending billions and billions, you'll spend less, and you'll come up with hopefully the same solution.' Meanwhile, OpenAI CEO Sam Altman has hailed his new Chinese competitor as 'impressive' while also touting ChatGPT's alleged superiority.

DeepSeek's arrival destabilized the AI market and caused the US stock market to hemorrhage $1 trillion on Monday. But Trump reacted quickly, saying the chatbot's release 'should be a wake-up call for our industries that we need to be laser-focused on competing to win.' He argued it could be a 'positive' for US tech giants, adding: 'Instead of spending billions and billions, you'll spend less, and you'll come up with hopefully the same solution.' Meanwhile, OpenAI CEO Sam Altman has hailed his new Chinese competitor as 'impressive' while also touting ChatGPT's alleged superiority.

DeepSeek-R1 launched last week and is 20 to 50 times more affordable to use than OpenAI's o1 model, depending on the task, according to a post on DeepSeek's official WeChat account. The development is significant given the AI boom, ignited by ChatGPT's release in late 2022, has propelled Nvidia to become one of the world's most valuable companies. Altman said in a post on X that it was 'legit invigorating to have a new competitor' . He called DeepSeek's R1 'an impressive model, particularly around what they're able to deliver for the price,' and pledged to speed up some OpenAI releases. The development comes against the background of a US government push to ban Chinese-owned TikTok in the United States or force its sale .

DeepSeek-R1 launched last week and is 20 to 50 times more affordable to use than OpenAI's o1 model, depending on the task, according to a post on DeepSeek's official WeChat account. The development is significant given the AI boom, ignited by ChatGPT's release in late 2022, has propelled Nvidia to become one of the world's most valuable companies. Altman said in a post on X that it was 'legit invigorating to have a new competitor' . He called DeepSeek's R1 'an impressive model, particularly around what they're able to deliver for the price,' and pledged to speed up some OpenAI releases. The development comes against the background of a US government push to ban Chinese-owned TikTok in the United States or force its sale .

David Sacks, Trump's AI advisor and prominent tech investor, said DeepSeek's success justified the White House's decision to reverse executive orders, issued under Joe Biden, that established safety standards for AI development. The regulations 'would have hamstrung American AI companies without any guarantee that China would follow suit,' Sacks wrote on X. Adam Kovacevich, CEO of the tech industry trade group Chamber of Progress, echoed the sentiment: 'Now the top AI concern has to be ensuring (the United States) wins.' Tech investor and Trump ally Marc Andreessen declared 'Deepseek R1 is AI's Sputnik moment,' referencing the 1957 launch of Earth's first artificial satellite by the Soviet Union that stunned the Western world.

David Sacks, Trump's AI advisor and prominent tech investor, said DeepSeek's success justified the White House's decision to reverse executive orders, issued under Joe Biden, that established safety standards for AI development. The regulations 'would have hamstrung American AI companies without any guarantee that China would follow suit,' Sacks wrote on X. Adam Kovacevich, CEO of the tech industry trade group Chamber of Progress, echoed the sentiment: 'Now the top AI concern has to be ensuring (the United States) wins.' Tech investor and Trump ally Marc Andreessen declared 'Deepseek R1 is AI's Sputnik moment,' referencing the 1957 launch of Earth's first artificial satellite by the Soviet Union that stunned the Western world.

'If China is catching up quickly to the US in the AI race, then the economics of AI will be turned on its head,' warned Kathleen Brooks, research director at XTB, in a note to clients. Microsoft CEO Satya Nadella took to social media hours before markets opened to argue less expensive AI was good for everyone. But last week at the World Economic Forum in Davos, Nadella warned: 'We should take the developments out of China very, very seriously.' Australia's Science Minister Ed Husic raised privacy concerns, urging users to think carefully before downloading the chatbot.

'If China is catching up quickly to the US in the AI race, then the economics of AI will be turned on its head,' warned Kathleen Brooks, research director at XTB, in a note to clients. Microsoft CEO Satya Nadella took to social media hours before markets opened to argue less expensive AI was good for everyone. But last week at the World Economic Forum in Davos, Nadella warned: 'We should take the developments out of China very, very seriously.' Australia's Science Minister Ed Husic raised privacy concerns, urging users to think carefully before downloading the chatbot.

'There are a lot of questions that will need to be answered in time on quality, consumer preferences, data and privacy management,' Husic told national broadcaster ABC. 'I would be very careful about that. These type of issues need to be weighed up carefully.' Microsoft, an eager adopter of generative AI, plans to invest $80 billion in AI this year, while Meta announced at least $60billion in investments on Friday . Much of that investment goes into the coffers of Nvidia, whose shares plunged a staggering 17 percent on Monday. The situation is particularly remarkable since DeepSeek, as a Chinese company, lacks easy access to Nvidia's state-of-the-art chips after the US government placed export restrictions on them.

'There are a lot of questions that will need to be answered in time on quality, consumer preferences, data and privacy management,' Husic told national broadcaster ABC. 'I would be very careful about that. These type of issues need to be weighed up carefully.' Microsoft, an eager adopter of generative AI, plans to invest $80 billion in AI this year, while Meta announced at least $60billion in investments on Friday . Much of that investment goes into the coffers of Nvidia, whose shares plunged a staggering 17 percent on Monday. The situation is particularly remarkable since DeepSeek, as a Chinese company, lacks easy access to Nvidia's state-of-the-art chips after the US government placed export restrictions on them.

The export controls are 'driving startups like DeepSeek to innovate in ways that prioritize efficiency, resource-pooling, and collaboration,' wrote the MIT Technology Review. Elon Musk, who has invested heavily in Nvidia chips for his company xAI, suspects DeepSeek of secretly accessing banned H100 chips - an accusation also made by the CEO of ScaleAI, a prominent Silicon Valley startup backed by Amazon and Meta. But such accusations 'sound like a rich kids team got outplayed by a poor kids team,' wrote Hong Kong-based investor Jen Zhu Scott on X. In a statement, Nvidia said DeepSeek's technology was 'fully export control compliant.'

The export controls are 'driving startups like DeepSeek to innovate in ways that prioritize efficiency, resource-pooling, and collaboration,' wrote the MIT Technology Review. Elon Musk, who has invested heavily in Nvidia chips for his company xAI, suspects DeepSeek of secretly accessing banned H100 chips - an accusation also made by the CEO of ScaleAI, a prominent Silicon Valley startup backed by Amazon and Meta. But such accusations 'sound like a rich kids team got outplayed by a poor kids team,' wrote Hong Kong-based investor Jen Zhu Scott on X. In a statement, Nvidia said DeepSeek's technology was 'fully export control compliant.'

AI chipmaker Nvidia, which has benefitted from the AI frenzy over the last eighteen months, rose 4.8 percent in premarket trading Tuesday - a day after $593 billion was wiped off its market value in the biggest single-session loss for any company. Other AI-linked stocks also regained some ground, with Oracle and Broadcom rising 3.5 percent and 4 percent, respectively. Wall Street indexes sank 3 percent on Monday morning after a Chinese artificial intelligence startup triggered fears America's top tech stocks are overvalued . On Monday, the S&P 500 dropped 1.5 percent to 6,012.28, dragged down in large part by a 16.9 percent fall for Nvidia.

AI chipmaker Nvidia, which has benefitted from the AI frenzy over the last eighteen months, rose 4.8 percent in premarket trading Tuesday - a day after $593 billion was wiped off its market value in the biggest single-session loss for any company. Other AI-linked stocks also regained some ground, with Oracle and Broadcom rising 3.5 percent and 4 percent, respectively. Wall Street indexes sank 3 percent on Monday morning after a Chinese artificial intelligence startup triggered fears America's top tech stocks are overvalued . On Monday, the S&P 500 dropped 1.5 percent to 6,012.28, dragged down in large part by a 16.9 percent fall for Nvidia.

Investors dumped around $1 trillion of technology stocks in premarket trading sending the S&P 500 1.7 percent lower as markets opened. The tech-heavy Nasdaq was hit harder, tumbling more than 3 percent on Monday morning. The panic has been driven by Chinese artificial intelligence startup DeepSeek which demonstrated a chatbot that it says rivals the top versions from OpenAI and Google but for a fraction of the cost. As of early Tuesday morning, Dow E-minis were up 25 points, or 0.06 percent, S&P 500 E-minis were up 19.5 points, or 0.32 percent, and Nasdaq 100 E-minis were up 125.75 points, or 0.59 percent. Company earnings are likely to take center stage this week.

Investors dumped around $1 trillion of technology stocks in premarket trading sending the S&P 500 1.7 percent lower as markets opened. The tech-heavy Nasdaq was hit harder, tumbling more than 3 percent on Monday morning. The panic has been driven by Chinese artificial intelligence startup DeepSeek which demonstrated a chatbot that it says rivals the top versions from OpenAI and Google but for a fraction of the cost. As of early Tuesday morning, Dow E-minis were up 25 points, or 0.06 percent, S&P 500 E-minis were up 19.5 points, or 0.32 percent, and Nasdaq 100 E-minis were up 125.75 points, or 0.59 percent. Company earnings are likely to take center stage this week.

Other Big Tech stocks took heavy losses on Monday, pulling the Nasdaq composite down 3.1 percent to 19,341.83 for its worst loss in more than a month. Another US chipmaker Broadcom also lost around 12 percent while software giant Oracle lost 8 percent in early trading. Microsoft slid 3.5 percent and Amazon was down 0.24 percent in the first hour of trading. Google parent company Alphabet lost about 3.5 percent and Facebook parent Meta shed 2.5 percent. The damage was focused on AI-related stocks , while the rest of the market held up much better. The Dow Jones Industrial Average rose 0.7 percent to 44,713.58, and the majority of US stocks climbed. But anyone holding an S&P 500 index fund, which is found in many 401(k) accounts, felt the pain because of how influential those tech giants have become on indexes.

Other Big Tech stocks took heavy losses on Monday, pulling the Nasdaq composite down 3.1 percent to 19,341.83 for its worst loss in more than a month. Another US chipmaker Broadcom also lost around 12 percent while software giant Oracle lost 8 percent in early trading. Microsoft slid 3.5 percent and Amazon was down 0.24 percent in the first hour of trading. Google parent company Alphabet lost about 3.5 percent and Facebook parent Meta shed 2.5 percent. The damage was focused on AI-related stocks , while the rest of the market held up much better. The Dow Jones Industrial Average rose 0.7 percent to 44,713.58, and the majority of US stocks climbed. But anyone holding an S&P 500 index fund, which is found in many 401(k) accounts, felt the pain because of how influential those tech giants have become on indexes.

Some commentators have warned that DeepSeek's arrival may lead to democratization in the AI research market, as innovation may no longer only be accessible to those with the deepest pockets. As a result, it could mean more innovation in the sector comes from a broader spectrum of places, rather than just the big names in California. Nigel Green, chief executive of asset management firm deVere Group, said: 'This is a wake-up call for markets. The assumption that tariffs could contain China's technological ambitions is being dismantled in real time.

Some commentators have warned that DeepSeek's arrival may lead to democratization in the AI research market, as innovation may no longer only be accessible to those with the deepest pockets. As a result, it could mean more innovation in the sector comes from a broader spectrum of places, rather than just the big names in California. Nigel Green, chief executive of asset management firm deVere Group, said: 'This is a wake-up call for markets. The assumption that tariffs could contain China's technological ambitions is being dismantled in real time.

'DeepSeek's breakthrough is proof that innovation will always find a way forward, regardless of economic barriers. 'By restricting China's access to high-end semiconductors, Washington sought to slow its progress in AI. 'Rather than being crippled by US sanctions, Beijing has cultivated AI models that require significantly less computing power, diminishing its reliance on American technology and eroding US leverage over global supply chains.'

'DeepSeek's breakthrough is proof that innovation will always find a way forward, regardless of economic barriers. 'By restricting China's access to high-end semiconductors, Washington sought to slow its progress in AI. 'Rather than being crippled by US sanctions, Beijing has cultivated AI models that require significantly less computing power, diminishing its reliance on American technology and eroding US leverage over global supply chains.'

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