Chip stocks rebounded sharply Tuesday, recovering from recent losses driven by concerns over Chinese competition in the artificial intelligence sector. The sector closed higher as investors reassessed the impact of DeepSeek, a Chinese AI model that had rattled markets last week.
Nvidia led the charge, climbing more than 5% after a steep decline. Other major chipmakers, including AMD and Intel, also posted gains. The broader market followed, with the Nasdaq Composite rising over 1%.
The sell-off earlier this month stemmed from fears that DeepSeek’s low-cost AI model could disrupt U.S. chip demand. Analysts argued the reaction was overblown, pointing to sustained global AI investment and supply constraints.
Meanwhile, oil prices climbed as Middle East tensions escalated. Crude futures rose nearly 2% after reports of a drone strike on a Saudi oil facility. The incident reignited fears of supply disruptions in the region.
General Motors reported stronger-than-expected quarterly profits, driven by high-margin pickup trucks and SUVs. The automaker also raised its full-year guidance, citing resilient consumer demand despite higher interest rates.
The company’s stock gained more than 4% in trading. Executives noted that premium vehicle sales offset rising costs from labor contracts and electric vehicle investments.
Market analysts remained cautious about the chip sector’s long-term outlook. They highlighted that geopolitical risks and export controls could still weigh on future growth.
