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Nvidia rallied to gain almost 9% on Tuesday, a day after notching the biggest single-day market-cap loss ever.
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Major indexes also reversed course after a tech-led crash hit the S&P 500 and Nasdaq on Monday.
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Investors are closely watching for more details on DeepSeek and bracing for mega-cap tech earnings on Wednesday.
After Monday's massive exodus out of US tech stocks, investors proved eager to buy the dip in Tuesday's session.
Nvidia climbed to end more than 8% higher at $128.86 a share, bouncing back from a drastic double-digit plunge that wiped out $589 billion of its market cap.
The S&P 500 and tech-heavy Nasdaq Composite also regained ground, jumping about 1% and 2%, respectively.
Here's where US indexes stood at the 4 p.m. closing bell on Tuesday:
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S&P 500: 6,067.69, up 0.92%
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Dow Jones Industrial Average: 44,850.35, 0.31% (+136.77 points)
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Nasdaq Composite: 19,733.59, up 2.03%
Nvidia and the broader market's sell-off was sparked by the reveal of DeepSeek, an AI tool from a startup in China on par with US technology, but at a fraction of the cost. Other tech mega-cap stocks weren't spared, tanking benchmark indexes.
Investors fled over fear that DeepSeek's chatbot marked the end of Wall Street's AI dominance, but, by Tuesday, this began to seem like an overreaction.
American AI hyperscalers are still "fantastic companies," said Robert Teeter, chief investment strategist at Silvercrest Asset Management. They're not necessarily set to lose out from DeepSeek's discounted model.
"Anytime you get this intense competition, the likely outcome is costs come down, and when costs come down, you get broader use of AI and broader opportunity to deploy that AI in a way that improves productivity and margins," he told CNBC.
Gene Munster, a managing partner at Deepwater Asset Management, questioned whether DeepSeek's tool will still be able to keep spending down when it comes to developing higher-level AI.
Meanwhile, stocks are likely rebounding ahead of this week's mega-cap earnings, with Tesla Microsoft, and Meta scheduled to report on Wednesday.
"Consensus is that they're going to have some sort of reassuring comments, that the AI trade, the hardware trade, the capex spending is intact," the tech investors said during an interview with CNBC.
Semiconductor firms were Monday's biggest losers, but the sector broadly recovered alongside Nvidia. Broadcom and Oracle climbed almost 3% and 4%, respectively.
Bond yields edged up, reversing a downtrend that took over on Monday as investors piled into safe-haven assets amid the spike in tech-related risks. The 10-year Treasury yield rose to 4.538%.
Read the original article on Business Insider