Investors freaked out as China-based DeepSeek's AI chatbot became a threat to Nvidia, but some strategists say this will be a net positive for stocks.

Shares for leading US chip firm Nvidia dropped by almost 17% on Monday after the emergence of DeepSeek stunned Silicon Valley.

So much for the quiet pre-holiday trading session as Asian equities were mixed though Australia was closed for Australia Day, Indonesia was closed for Al Isra’ wal-Mi’raj, South Korea was closed for the Korean New Year,

Entrepreneur Marc Andreessen, known for co-writing Mosaic, one of the world’s first web browsers, wrote Sunday on X that “DeepSeek R1 is AI’s Sputnik moment,” likening it to the space race between the U.S. and the Soviet Union and the event that forced the U.S. to realize that its technological abilities were not unassailable.

US tech stocks were steady on Tuesday after they slumped on Monday following the sudden rise of Chinese-made artificial intelligence (AI) app DeepSeek. Shares in chip giant Nvidia rose by 8.8%, having slumped on Monday, as experts said the AI selloff may have been an over-reaction.

Yet many in Silicon Valley believe the broad sell-off is an overreaction to DeepSeek’s latest model, which they argue could spur wider adoption and utility of AI by radically lowering the technology’s cost,

Santa Clara based chipmaker Nvidia bounced back this morning after having its worst day on Wall Street in nearly five years. Nvidia shares are up nearly 3% following Monday's 17% plunge that resulted in a loss of almost $590 billion of its market value,