- US stock futures were recovering some ground on Tuesday morning after panic hit markets on Monday.
- The sell-off was triggered by fears over the rapid and cheap advances made by Chinese AI startup DeepSeek.
- Nvidia was up 5% ahead of the opening bell after shedding 17% on Monday.
US stock futures steadied on Tuesday morning after a dramatic sell-off on Monday triggered by Chinese AI firm DeepSeek.
Nasdaq 100 futures were up 0.6% just before 6:30 a.m. ET, while S&P 500 futures climbed by 0.3%. Dow Jones Industrial Average futures were up 0.1%.
Nvidia was up 5.3% in pre-market trading on Tuesday, a sign of cautious recovery. Jensen Huang's AI chipmaker had plunged 17% the previous day— the biggest single-day drop for a US company. Huang's personal net worth fell from $121 billion to around $100 billion amid the sell-off.
Fellow US tech giants Broadcom and Oracle also recovered from dramatic declines, rising in pre-market trading by 3.9% and 3.2%, respectively.
On Monday, global stocks plummeted as traders fled the tech sector over concerns about DeepSeek's impressive and cheap capabilities and their implications for the US's high-spend strategy on AI.
The S&P 500 closed nearly 1.5% lower, while the tech-heavy Nasdaq Composite shed over 3% by the end of the day. More than $1 trillion in market capitalization was erased from US stocks.
"Valuations have been getting lofty in the tech space and investors need to appreciate that richly priced stocks can fall hard on the slightest bit of bad news," said Russ Mould, investment director at AJ Bell.
The DeepSeek model impressed the tech community and will have a ripple impact, Dan Ives of Wedbush Securities wrote in a morning note, but said that DeepSeek is "not launching 100x the capacity/algorithms that is needed to even consider this a competitive threat in our view."
"No US Global 2000 is going to use a Chinese startup DeepSeek to launch their AI infrastructure and use cases. At the end of the day there is only one chip company in the world launching autonomous, robotics, and broader AI use cases and that is Nvidia," Ives said.