On Monday, NASDAQ shares plummeted on news that a Chinese AI firm, DeepSeek, had launched AI models it claimed were on a par or better than industry-leading US rivals at a fraction of the cost.

To be fair, the sell-off was not helped by the over-enthusiastic media, which not only believed what DeepSeek said but penned long, ill-informed treatises about how it could revolutionise AI.

By the end of the day, AI hardware names like Nvidia, Microsoft and TSMC were hammered.

Yesterday, people started to wake up to the fact that DeepSeek’s product was a long way from unseating any business rival, and while it needed less hardware than existing models, it still needed bucketloads.

Suddenly, investors realised that all the shares they dumped were underpriced and rushed to buy them back again.

The Nasdaq jumped two per cent, and AI chip leader Nvidia rose 8.9 per cent.

Cherry Lane Investments Rick Meckler said it was the sort of reaction you get when you have news that's not very specific and more of a potential for a future change.

"Some of the tech market, particularly around AI, was ready for a bit of a sell-off, and this news provided the excuse for it. Today, you're seeing the bargain hunters come back in, as well as those who are discounting the news about DeepSeek since we don't know very much about it."

More gains are expected today as more people snap up the undervalued shares. Over the next two weeks, the big tech companies are expected to announce stonking quarterly results and good future projections.