Tech shares hold steady as Nvidia gains slightly following DeepSeek's dramatic downturn.

Tech shares hold steady as Nvidia gains slightly following DeepSeek's dramatic downturn.

China's DeepSeek AI Assistant Gains Traction as Tech Stocks Steady

Investors Weigh U.S.-China AI Competition Amid Market Shifts

LONDON/SINGAPORE, Jan 28 (Reuters) - Technology stocks stabilized on Tuesday, buoyed by a moderate recovery in Nvidia (NVDA.O) shares following a historic sell-off. The downturn was triggered by the emergence of a low-cost AI competitor from China that has spurred concerns over the dominance of U.S. tech giants.

Nvidia, a leader in AI-focused semiconductors, saw its shares plummet by 17% on Monday, erasing $593 billion from its valuation—marking the largest single-day loss in history for any company. The plunge sent ripples across U.S. markets, leading to a broad tech sector slump.

By Tuesday, Nvidia shares recovered approximately 5% in premarket trading. Oracle (ORCL.N) and Marvell Technology (MRVL.O) also gained, rising 3.4% and 3.6% respectively, while European tech shares rebounded modestly.

Monday's losses were largely attributed to the debut of DeepSeek, a Chinese AI startup, which launched a free virtual assistant last week. The company claims its model operates with significantly lower data requirements and costs compared to existing options. Despite the global buzz surrounding DeepSeek, skepticism persists regarding the validity of its cost-efficiency assertions.

As investors monitor this growing AI rivalry, the potential implications for market leadership and innovation between the U.S. and China remain a key focal point.