US President Donald Trump said Monday that Chinese AI startup DeepSeek's dark-horse entry into the AI race should serve as a "wake-up call" for American companies developing artificial intelligence.
"Hopefully, the release of DeepSeek AI from a Chinese company should be a wake-up call for our industries that we need to be laser-focused on competing to win," Trump told a Republican congressional retreat in Florida.
Trump's comments came after the AI model powering DeepSeek's chatbot began outperforming top US models, with the Chinese company saying they were made at a fraction of the cost.
By Monday, DeepSeek's chatbot was the number one product on the Apple App Store, offering a counternarrative to the widespread belief that the future of AI will require hundreds of billions of dollars of investment.
Big tech stocks dropped sharply Monday, with Nvidia down 17.6%, and they dragged the Nasdaq composite down 3.3%.
Trump says shock could also be 'positive' for US companies
Trump said the shock news could also be a "positive" for US tech companies, as it could force them to innovate more cheaply.
"I've been reading about China and some of the companies in China, one in particular coming up with a faster method of AI and much less expensive method, and that's good because you don't have to spend as much money. I view that as a positive, as an asset," Trump said.
"I view that as a positive because you'll be doing that too, so you won't be spending as much, and you'll get the same result, hopefully," he added.
Last week, Trump announced a $500 billion (€478 billion) project to build infrastructure for AI in the US, led by Japanese giant SoftBank and ChatGPT maker OpenAI.
Why did DeepSeek impact technology stocks?
Last week, DeepSeek launched its free AI assistant it said uses less data and can be developed at a fraction of the cost that major companies are investing in AI development.
So far, US tech companies have raced and relied to get their hands on special AI chops that were made by a company based in California, Nvidia.
But the launch and increasing popularity of DeepSeek spurred investors to dump tech stocks globally.
Nvidia lost close to 600 billion in market cap on Monday, the biggest drop for any company on a single day in US history.
Declines in US equities followed a sell-off that started in Asia, where Japan's SoftBank Group closed down 8.3%, and moved through Europe where ASML fell 7%.
