Tech Market Crashes Over Unveiling of New Chinese AI App

Donald Trump has often weighed the success of his presidency in terms of how the stock market is performing.

Well, he took a major hit early in the week after the Chinese unveiled a new AI app called DeepSeek.

The app was reportedly developed for less than $6 million.

A Positive

Donald Trump already put a bit of a spin on this, calling it “a positive” development and a “wakeup call for our industries that we need to be laser-focused on competing to win.”

Trump said this after he announced a $500 billion IA project called “Stargate” that will be backed by OpenAI, Softbank, and Oracle.

In announcing the new venture, Trump stated, "What we want to do is we want to keep it in this country.

"China is a competitor, others are competitors. We want to be in this country, and we're making it available.

“I'm gonna help a lot through emergency declarations, because we have an emergency, we have to get this stuff built.

“So they have to produce a lot of electricity. And we'll make it possible for them to get this production done easily, at their own plants if they want."

Then DeepSeek was dropped, and tech stocks got crushed in the process.

Island Capital Investments CEO Anthony Esposito stated, “The DeepSeek announcement from China was nothing short of a financial Scud missile aimed at a US market that is much more fragile than most will admit.”

The question is an obvious one… how can you justify it taking hundreds of billions to develop this new project when what appears to be a very competitive AI program was just dropped for about $6 million?

Nvidia, which dominates the chip-making industry, dropped by 17%. Alphabet fell by 4%, Microsoft and Tesla both dropped by about 2%, yet Amazon somehow avoided the fray, actually closing up a few points.

Wedbush’s Dan Ives, a bullish tech industry analyst, tried to calm the panic, stating, “At the end of the day there is only one chip company in the world launching autonomous, robotics, and broader AI use cases and that is Nvidia.

“Launching a competitive LLM model for consumer use cases is one thing … launching broader AI infrastructure is a whole other ballgame and nothing with DeepSeek makes us believe anything different.”

I tend to agree, but the market does not, and that is not good for Trump.

I fully expect to see Trump’s people put something together on this to counter the market drop, but for now, it could be a buyer’s market!