The Nasdaq jumped 2.0 per cent and AI chip leader Nvidia rose 8.9 per cent, a day after its 17 per cent drop erased about $US593 billion ($A950 billion) from its market value in the biggest single-session loss for any company.
The S&P 500 technology sector rallied 3.6 per cent in its biggest daily percentage gain since July 31, while an index of semiconductor shares gained 1.1 per cent.
Apple shares rose 3.7 per cent. Investors were eager to hear from Apple, Microsoft and other companies when they report quarterly results later this week.
The tech sell-off followed Chinese startup DeepSeek's launch of AI models it said were on a par or better than industry-leading US rivals at a fraction of the cost.
"We're getting the typical bounceback rally you'd expect when you have news that's not very specific and more of a potential for a future change," said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
"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 and also those who are discounting the news about DeepSeek since we don't really know very much about it."
The Dow Jones Industrial Average rose 136.77 points, or 0.31 per cent, to 44,850.35, the S&P 500 gained 55.42 points, or 0.92 per cent, to 6,067.70 and the Nasdaq Composite gained 391.75 points, or 2.03 per cent, to 19,733.59.
Nvidia's forward price-to-earnings ratio, a common valuation metric, had hit its cheapest since December 2023.
Optimism over AI helped to drive sharp gains in Nvidia and the stock market for much of the last two years.
Fourth-quarter 2024 US earnings season is in full swing, with shares of Royal Caribbean rallying 12 per cent after the cruise operator forecast annual profit largely above expectations.
Boeing shares ended up 1.5 per cent, though it reported its biggest annual loss since 2020. General Motors shares fell 8.9 per cent following its results and outlook, with investors weighing the threat of tariffs that could hit the automaker's business.
US President Donald Trump said late on Monday he plans to impose tariffs on imported computer chips, pharmaceuticals and steel.
On Wednesday, the Federal Reserve is widely expected to hold its lending rate steady in its first interest-rate decision of the year.
Declining issues outnumbered advancers by a 1.13-to-1 ratio on the NYSE. There were 165 new highs and 46 new lows on the NYSE.
On the Nasdaq, 2,188 stocks rose and 2,216 fell as declining issues outnumbered advancers by a 1.01-to-1 ratio.
Volume on US exchanges was 13.87 billion shares, compared with the roughly 15.5 billion average for the full session over the last 20 trading days.
