Silicon Valley and Washington leaders said the app shows China can challenge the U.S. The Nasdaq lost 3 percent and chipmaker Nvidia shed $589 billion in market capitalization.

President Donald Trump said Monday that the sudden rise of Chinese AI app DeepSeek “should be a wake-up call” for America’s tech companies.

The tech-heavy Nasdaq index lost nearly 4 percent in early trading Monday, with chipmaker Nvidia down nearly 12 percent.

U.S. tech stocks, including Nvidia, Oracle and Google, plummeted Monday after Chinese startup DeepSeek said it created an AI system that can compete against chatbots such as OpenAI's ChatGPT at much lower costs.