Nvidia shares clawed back some of their losses last night as Donald Trump warned the emergence of an artificial intelligence (AI) start-up from China was a “wake-up call” for US tech, writes Callum Muirhead.

Having tumbled 17pc on Monday, wiping almost $650bn off its value in the biggest one-day stock market loss in corporate history, the shares rose almost 9pc.

The rally will come as a relief for the many Irish investors exposed to the microchip giant through direct share ownership or through their pensions and other investments.

The success of a free chatbot from Chinese firm DeepSeek has sent shockwaves through Silicon Valley and Wall Street – sparking fears the West could fall behind in the AI arms race while also casting doubt over the sky-high valuations of US tech stocks.

The Hangzhou-based firm claimed its model was developed for under €5m – calling into question the billions of dollars of investment earmarked in the US for the technology.

DeepSeek has also quickly gained popularity with users, overtaking ChatGPT to become the most downloaded chatbot on the Apple App store on Monday.

Speculators betting against Nvidia shares are estimated to have made a €6bn profit on Monday alone.

Trump said: “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.”

But the President added that the new chatbot could be a positive for the US.

He said: “If you could do it cheaper, if you could do it for less and get to the same end result, I think that’s a good thing for us.”

Sam Altman, the chief executive of ChatGPT maker OpenAI, also appeared to welcome the challenge.

The tech boss wrote on social media platform X that DeepSeek’s new AI model was “impressive, particularly around what they’re able to deliver for the price”.

He added: “We will obviously deliver much better models and also it’s invigorating to have a new competitor.”

But some warned the tech stock rout was a sign that the growing frenzy over AI had created a bubble in the US market similar to that which preceded the dotcom crash at the turn of the millennium.

Billionaire investor Ray Dalio, the head of asset management firm Bridgewater Associates, said the combination of high share prices as well as a risk posed by high interest rates could “prick the bubble”.

“Where we are in the cycle right now is very similar to where we were between 1998 or 1999,” the Wall Street veteran told the FT.

“In other words, there’s a major new technology that certainly will change the world and be successful.

“But some people are confusing that with the investments being successful.”

DeepSeek’s popularity has also raised concerns about data protection as well as the spread of Chinese government censorship outside the country.

Australia’s science minister Ed Husic is among those urging caution, telling the country’s national broadcaster ABC that there were still “a lot of questions that will need to be answered” about the app’s privacy and data management.

The ability of a Chinese firm to develop a competitive AI chatbot has also called into question whether efforts by Trump and his predecessor Joe Biden to restrict access to American AI technology and computer chips have backfired.

Richard Hunter, head of markets at Interactive Investor, said: “The DeepSeek threat has certainly ruffled feathers and even if this storm subsides, other challenges to the US AI dominance could follow.

“At this stage, the longer-term investor will likely be watching developments rather than rushing for the exit.”