Investing.com -- Nvidia (NASDAQ:NVDA) and other chip stocks are gaining in premarket trading Tuesday, poised to recover some of the losses from Monday’s sharp sell-off.

Nvidia shares jumped nearly 5%, while Broadcom (NASDAQ:AVGO) climbed 4% and AMD (NASDAQ:AMD) added 1.6%. Other semiconductor stocks also saw gains, with Micron (NASDAQ:MU) up 2.5%, TSMC rising 2.6%, and Marvell Technology Inc (NASDAQ:MRVL) advancing 3.6%. Nasdaq 100 futures followed suit, gaining about 0.6%.

The rebound comes after a steep decline on Monday when tech stocks were hammered amid concerns that a low-cost Chinese artificial intelligence model could threaten the dominance of industry leaders like Nvidia. The sell-off wiped $593 billion off Nvidia’s market value—the largest single-day market-cap loss ever recorded for a US company.

The sell-off was triggered by Chinese startup DeepSeek, which recently launched a free AI assistant touted as more efficient and cost-effective than existing models. By Monday, the assistant had overtaken ChatGPT in downloads on Apple’s app store, intensifying fears of competitive disruption in the AI space.

Monday’s turmoil dragged the Nasdaq down 3.1%, with Nvidia as the biggest weight on the index. The chipmaker’s stock plunged nearly 17%, breaking its own record for the largest one-day market-cap loss, previously set in September.

Broadcom also dropped 17.4%, while Microsoft (NASDAQ:MSFT), a key ChatGPT backer, slipped 2.1%, and Alphabet (NASDAQ:GOOGL), Google’s parent company, fell 4.2%.

The Philadelphia Semiconductor Index suffered a 9.2% drop, its steepest decline since March 2020. Marvell Technology was the hardest hit, plummeting 19.1%.

US equity losses followed a global selloff that began in Asia, where SoftBank Group Corp. (TYO:9984) dropped 8.3%, and extended to Europe, with ASML Holding NV (AS:ASML) ADR (NASDAQ:ASML) declining 7%.

US President Donald Trump commented on Monday that DeepSeek could serve as a "wakeup call" and might ultimately be a positive development.

Not much is known about DeepSeek, a startup based in Hangzhou. Records show its controlling shareholder is Liang Wenfeng, co-founder of the quantitative hedge fund High-Flyer. According to a paper published by its researchers last month, the company's DeepSeek-V3 model, launched on January 10, was trained using Nvidia's lower-tier H800 chips at a cost of less than $6 million.

Last week, DeepSeek released its R1 model, which it claims is 20 to 50 times cheaper to operate than OpenAI's o1 model, depending on the specific task. This cost advantage was highlighted in a post on the company’s official WeChat account.

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