U.S.-listed shares of tech giants are gaining some lost ground this morning after a China-based startup shocked the AI world with a powerful LLM. Yesterday, shockwaves rippled across the American tech industry after news spread over the weekend about a powerful new large language model (LLM) from China called DeepSeek.

Global investors are worried the emergence of a low-cost Chinese AI model will threaten the dominance of AI leaders.

U.S. stocks recovered some ground on Tuesday after getting hammered by fears over China's DeepSeek AI model built on a shoestring budget.

Nvidia shares closed down almost 17%, posting its biggest drop since March 2020 and erasing nearly $600 billion from the company's market cap. Broadcom fell 17.4%, and other chip stocks like Micron declined 11.

American AI stocks got sucker punched after China's DeepSeek app reportedly showed advancements against rivals sending investors into sell mode, shaving 3% off the Nasdaq.

President Donald Trump said DeepSeek’s AI advances should be a “wake-up call” for the U.S.

Monday's DeepSeek sell-off may have rattled investors who picked up shares of a top semiconductor play at any time over the past few weeks. Undoubtedly, it's not hard to imagine many new retail investors panicking in the face of Nvidia (NASDAQ:NVDA) stock's sudden double-digit percentage decline.

DeepSeek is shaking up the AI industry with cost-efficient large language models it claims can perform just as well as rivals from giants like OpenAI and Meta. The Chinese startup says its flagship R1 reasoning model is capable of achieving “performance comparable” to OpenAI’s o1 equivalent,

The Chinese company DeepSeek caused a major stir on the stock exchange. Investors reacted nervously to information that the Chinese startup had developed a competitive artificial intelligence model for a fraction of the billions spent by Silicon Valley.