U.S. stocks staged a remarkable comeback on Tuesday, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all closing higher as investors shrugged off the previous day's rout in artificial intelligence-related technology shares. The rebound was led by a resurgence in Nvidia, the AI chip giant that had suffered its biggest single-session loss since the COVID-19 crash.
What this really means is that the market is still bullish on the long-term prospects of AI, despite a brief scare over the potential impact of a low-cost Chinese AI model developed by DeepSeek. Investors see the AI boom as a multi-year trend that is far from over, and they were quick to scoop up beaten-down tech stocks at a discount.
Nvidia and Other AI Plays Rebound
The biggest story of the day was undoubtedly Nvidia's 8.9% surge, a sharp turnaround from the nearly 17% plunge it suffered on Monday. Other AI-linked companies also bounced back, with the S&P 500 technology sector registering its biggest daily gain since July 2031. Broadcom and Palantir Technologies were among the standout performers.
The bigger picture here is that while the DeepSeek news may have momentarily shaken investor confidence, the underlying demand for AI-powered technologies remains strong. Companies are still pouring billions into building out their AI capabilities, and that spending is unlikely to dry up anytime soon. As Rob Haworth of U.S. Bank Asset Management put it, "Ultimately, demand is not going away for AI even with the DeepSeek news. They're all going to have to spend more money and that's what the AI story has been. This is a fairly long cycle story."
Of course, there are still risks on the horizon, from the potential for a trade war to broader economic slowdown concerns. But for now, Wall Street appears to have regained its confidence in the AI revolution, and that bodes well for the technology sector in the months and years ahead.