Fears of upheaval in the AI gold rush rocked Wall Street on Monday following the emergence of a popular ChatGPT-like model from China, with US President Donald Trump saying it was a “wake-up call” for Silicon Valley.
Last week’s release of the latest DeepSeek model initially received limited attention, overshadowed by the inauguration of Trump on the same day.
However, over the weekend, the Chinese artificial intelligence startup’s chatbot surged to become the most downloaded free app on Apple’s US App Store, displacing OpenAI’s ChatGPT.
What truly rattled the industry 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, primarily on expensive Nvidia chips and software.
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.
The news sent shockwaves through the US tech sector, exposing a critical concern: should tech giants continue to pour hundreds of billions of dollars into AI investment when a Chinese company can apparently produce a comparable model so economically?
DeepSeek’s apparent advances were a poke in the eye to Washington and its priority of thwarting China by maintaining US technological dominance.
Trump reacted quickly on Monday, saying the DeepSeek 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.”
OpenAI chief executive Sam 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.
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.”
