Nvidia shares' 9% recovery Tuesday was the second-best day in terms of market cap added for any company ever—but the company faced another selloff Wednesday.

Chip stocks in the U.S. and Europe rose on Wednesday for a second straight day, recovering from a punishing selloff triggered by China's low-cost DeepSeek artificial intelligence tool at the start of the week.

Silicon Valley and Washington leaders said the app shows China can challenge the U.S. The Nasdaq lost 3 percent and chipmaker Nvidia shed $589 billion in market capitalization.

Global chip stocks slumped Monday on DeepSeek revealing it had developed AI models that nearly matched American rivals despite using inferior chips.