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Nvidia shares rose on Tuesday, as markets steadied following a tech rout sparked by Chinese start-up DeepSeek’s advances in artificial intelligence.
The US chipmaker gained 3.5 per cent in pre-market trading following a historic 17 per cent fall that wiped $589bn off its market value.
Monday’s losses, which helped drag down the tech-focused Nasdaq Composite index by 3.1 per cent, came as Wall Street and Silicon Valley panicked over a perceived threat from DeepSeek to the continued dominance of the US in AI.
But Nasdaq futures gained 0.3 per cent on Tuesday as relative calm returned to markets. The S&P 500 was set to open 0.3 per cent higher, following a 1.5 per cent fall.
“It was all about ‘sell first, think later’,” said Barclays analyst Emmanuel Cau. “Now people are having second thoughts and bargain hunters may step in.”
The Chinese company’s model, which achieved a quality of output similar to US chatbots but with apparently far less capital expenditure, has called into question the need to invest hundreds of billions of dollars in underlying AI infrastructure.
Markets in Europe and Asia also steadied. ASML, the chip equipment maker that until Monday’s sell-off was Europe’s most valuable tech company, fell 0.4 per cent. Siemens Energy — which fell 20 per cent as the tech rout deepened — was up 8.1 per cent.
The Stoxx Europe 600 index climbed 0.6 per cent.
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“Investors have been reminded that even technology stocks need to have a risk premium,” said Guy Miller, chief market strategist at insurer Zurich. “[The tech rout has been] a healthy reminder that nothing in markets, or in technological development, is a straight line.”
Japan’s tech-heavy Nikkei 225 closed down 1.4 per cent as its chipmaking companies continued their decline. The broader Topix, which has lower weightings for Japan’s tech exporters, was flat.
Tokyo-listed shares in SoftBank lost 5.2 per cent, following Monday’s 10 per cent drop in shares of Arm Holdings — the US-listed chip design company in which the Japanese group holds an 88 per cent stake.
In currency markets, the US dollar strengthened 0.5 per cent against a basket of currencies, including the Japanese yen and the pound, after Donald Trump said he wanted “much, much bigger” tariffs than the 2.5 per cent that US Treasury secretary Scott Bessent has been pushing for, according to people familiar with the proposal.
DeepSeek’s promise of a much lower-cost AI model has raised the question of whether last week’s unveiling of the Stargate joint venture, involving SoftBank, Oracle and OpenAI in a $100bn data centre investment, “marked the peak of the AI capex boom”, said Chris Wood, strategist at Jefferies.
In Hong Kong, shares in Chinese tech companies recorded gains on Tuesday, although chipmaker SMIC closed down 0.4 per cent after falling as much as 2 per cent. The Hang Seng index closed up 0.2 per cent, led higher by mainland Chinese tech companies including Tencent and Baidu, which closed up 1.4 and 3.6 per cent respectively.
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