In Wednesday premarket trading, Alibaba's ( BABA , Financial ) U.S. listed shares surged over 3% after the Chinese tech giant said its Qwen AI model beat some competitors, including OpenAI, Meta, and DeepSeek. It comes after DeepSeek's low-cost generative AI model sent Nvidia and semiconductor stocks reeling in a massive selloff in the market earlier this week.

The gain brought Nvidia ( NVDA , Financial ), which lost a record $589 billion in market cap on Monday, clawing back $260 billion Tuesday, up 8.8 percent. The rebound fails to erase nearly 10 percent drops from Friday, suggesting investor skepticism in DeepSeek's competitive threat. The rise of cheap AI models could decimate Nvidia's string of control over high-end chips, and geopolitical risk builds up another dimension of uncertainty.

The White House is also scrutinizing whether OpenAI and Microsoft are investigating whether DeepSeek used OpenAI's data illegally to train its model, a claim that OpenAI and Microsoft ( MSFT , Financial ) are themselves investigating. It would further increase tensions between US and Chinese sources of AI materials.

Markets wait with bated breath as AI leads Big Tech earnings set to rock the market further.

This article first appeared on GuruFocus .