Technology stocks partially recovered on Tuesday after a massive selloff triggered by the release of a low-cost Chinese AI model, Reuters reported. Nvidia, which lost nearly $593 billion in market value on Monday—the biggest one-day loss for any company—bounced back 6%, though it remained well below last week’s levels.
The selloff followed China’s DeepSeek launching a free AI assistant that claims to operate at a fraction of the cost of existing models. While some doubt its cost efficiency, OpenAI CEO Sam Altman called it “an impressive model,” and former U.S. President Donald Trump labeled it “a wake-up call.”
Despite Tuesday’s rebound, concerns linger over AI stock valuations. Before the drop, Nvidia traded at nearly 60 times its earnings, far above the S&P 500’s 22. Some analysts believe that while cheaper AI models will impact competition, demand for high-performance chips will remain strong.
Retail investors seized the dip, buying a record $562 million worth of Nvidia shares on Monday. Meanwhile, tech heavyweights like Apple and Microsoft helped push the broader sector up 2.7%, ahead of key earnings reports expected later this week.
