Wall Street recovers some of the AI slump

Wall Street recovers partially from the Chinese AI influenza. The technology-heavy Nasdaq composite index and chip manufacturer Nvidia climbed again after Monday's price slaughter among AI-related technology stocks.

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Wall Street recovers some of the AI slump
Photo: Frank Franklin II/AP/TT

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Now the dust is settling after Monday's expected AI backlash, and despite still believing in AI-driven growth, maybe future investments in this sector won't be as easy as they have been over the past two years, says Emily Bowersock Hill, at analysis firm Bowersock Capital Partners, to CNBC.

At Tuesday's close, Nvidia – the flagship name in the hitherto US-dominated hype around AI investments – rose 8.8 percent. This after Monday's price collapse of 16.9 percent – which wiped out SEK 6,500 billion in market value.

Industry colleague Broadcom, which plummeted 17.4 percent the previous day, rose 2.6 percent.

Good day for the tech sector

The really big tech companies generally had a good day.

iPhone manufacturer Apple climbed 3.7 percent, software giant Microsoft 2.9 percent, Meta (Facebook) 2.2 percent, Google owner Alphabet 1.8 percent, e-commerce company Amazon 1.2 percent, and electric car manufacturer Tesla 0.2 percent.

This meant that Nasdaq's tech-heavy composite index rose 2 percent. The broad S&P 500 index rose 0.9 percent and the Dow Jones industrial index 0.3 percent.

The same turnaround can also be seen in the European market on Tuesday, where German Siemens Energy – which plummeted 20 percent on Monday – rose 7.5 percent.

Heavy news

Monday's price collapse came after Chinese Deepseek surprised the market with the launch of a low-cost AI model that matches today's American – and much more expensive AI models.

Deepseek's breakthrough – with significantly simpler chips than the latest from Nvidia – raises big question marks about the need for the large investments in AI infrastructure that have previously been on the cards in the US.

The turbulence comes ahead of heavy economic news later in the week.

These include Wednesday's interest rate decision from the US Federal Reserve and quarterly reports from Tesla, Meta, and Microsoft on Wednesday and from Apple on Thursday.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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