Vivek Ramaswamy calls China’s DeepSeek a ‘Sputnik moment’ for US amid $1 trillion Nasdaq rout

Vivek Ramaswamy, the Indian-American entrepreneur and former member of DOGE backed by Donald Trump, said that the slump in US markets following the launch of Chinese AI model DeepSeek was a 'Sputnik moment'.

On Monday, the US market crashed, especially the Big Tech stocks such as Nvidia, which reported 17% fall, while the Nasdaq composite declined 5%.
The tech-heavy Nasdaq Composite closed down 3.1%, with the drop at one point wiping more than $1tn off the index from its closing value of $32.5tn last week, The Guardian reported.

“Sputnik-like moments are a good thing; We don't need to freak out; we just need to wake up," Ramaswamy wrote on X.

Comparison with Sputnik

In 1957, the launch of Sputnik by the Soviet Union showed the capability of rocket technology, such as deploying rocket technology, which the US had not seen before.

Prior to the launch of Sputnik, the Soviet Union was considered technologically inferior. However, this belief was changed when Sputnik was launched on October 1, 1957. The successful launch of both Sputnik 1 and Sputnik 2 raised concerns in the US, underscoring the need for renewed efforts to catch up.

DeepSeek launch

Similar concerns were highlighted on Monday, sending shockwaves to Wall Street after the launch of the Chinese version of the ChatGPT model, challenging Silicon Valley.

Following its launch, DeepSeek became the top-rated free application on the Apple App Store in the US, overtaking ChatGPT. It is claimed that DeepSeek uses low-cost chips and less data.

The new model of DeepSeek, R1 was developed at a minimal cost compared to the leading AI companies, especially Nvidia's chips and software.

Industry reacts

The world's richest man, Elon Musk, who has invested heavily in Nvidia chips for his xAI company, alleged that DeepSeek may have used banned H100 chips. ScaleAI CEO Alexandr Wang also made a similar claim. In 2022, the US government banned the H100 chip, manufactured by Nvidia, from being sold to China due to concerns about advanced AI capabilities that could be used for military applications.

Microsoft CEO Satya Nadella highlighted the role of low-cost and affordable AI hours before the markets opened on Monday.