USA: US President Donald Trump has called the rise of China’s DeepSeek AI model a ‘wake-up call’ for US industries. This follows US chipmaker Nvidia’s massive loss of nearly US$600 billion (about S$812 billion) in market value.
Nvidia’s stock plummeted nearly 17% after the Chinese startup’s model showed the ability to match US tech giants at a fraction of the cost. Forbes reported that the US President sees this as a positive development, hoping it will result in a faster and much less expensive AI method.
According to LSEG data, Nvidia’s US$589 billion (S$797 billion) loss is the most significant one-day loss for a company on Wall Street, more than double its previous one-day record loss last September. The tech-heavy Nasdaq Composite index closed more than 3% lower.
DeepSeek, the Chinese startup whose chatbot topped the free apps on Apple’s US App Store, said it spent only US$5.6 million (S$7.6 million) developing its AI model, far less than the billions US companies have invested, Channel News Asia reported.
This sharply contrasts the recent announcement of a US$500 billion (S$676 billion) venture to build AI infrastructure in the United States, led by Japanese giant SoftBank and ChatGPT-maker OpenAI.
Kathleen Brooks, research director at XTB, said that China is challenging US tech dominance. She added that the focus is now on whether China “can do it better, quicker and more cost effectively” than the US and if they can win the AI race.
Art Hogan, chief market strategist at B Riley Wealth, described the market’s reaction as “shoot first, ask questions later,” with some scepticism about the Chinese company’s claims.
He said, “Everyone is trying to figure out ‘Can it be believed?’ and ‘What does it mean?’”
DeepSeek shook up the markets, so the startup announced on Monday that it would limit new user registrations due to “large-scale malicious” cyberattacks on its services.
Major AI players Meta and Microsoft are set to report earnings this week.
Shares in US chipmaker Broadcom retreated 17.4%, while Dutch firm ASML, which manufactures semiconductor production machines, fell 6.7%.
Constellation Energy, which plans to expand AI-related energy infrastructure, plunged more than 20%. The S&P 500 index also dropped 1.5%, while the Dow Jones Industrial Avergae gained 0.7%.
Frankfurt and Paris ended the day lower in Europe, while London remained flat.
Asian stocks that fell on Monday included SoftBank, which retreated over 8% in Tokyo. Japanese semiconductor companies Advantest and Tokyo Electron also saw losses of over 8% and nearly 5%, respectively.
Forbes also reported that the DeepSeek-driven stock market plunge led to significant losses for some of the world’s wealthiest people, including Oracle’s Larry Ellison, whose net worth dropped by US$27.6 billion (S$37.3 billion), and Nvidia’s Jensen Huang, who saw a loss of US$20.8 billion (S$28.1 billion)./TISG
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