Chip Rebound Lifts Wall Street, Easing AI Fears Ahead of Big Tech Earnings

US stocks opened higher on Monday as a rebound in semiconductor and AI-linked shares eased last week's selloff, shifting the market's focus to a heavy week of technology earnings that will test whether the artificial-intelligence investment boom still justifies premium valuations.

Nasdaq futures climbed ahead of the open after a technology-led decline, with dip buyers emerging on bets that the AI investment boom will continue to support solid earnings, Bloomberg reported. The cash market followed: the Nasdaq Composite was up about 1% in early trading, the S&P 500 gained roughly half a percent and the Dow Jones Industrial Average was little changed.

The bounce follows what NDTV Profit called a difficult week. The Nasdaq Composite fell 4.5%, ending a four-week winning streak; the S&P 500 lost nearly 2% in its biggest weekly decline since late June; and the IT sector dropped more than 6%, its worst weekly performance since April 2025. The Nasdaq 100's slide was its worst week since the tariff turmoil of April 2025, according to Bloomberg.

Chipmakers led Monday's recovery. The Philadelphia semiconductor index — the SOX — snapped an eight-day losing streak, its worst run since October 2008, rising 2.5% after last week's 11.5% slump, Reuters reported. Intel gained 5% after JPMorgan analysts upgraded the chipmaker, and AI infrastructure provider CoreWeave rose 4% after Goldman Sachs upgraded the stock, according to NDTV Profit. Advanced Micro Devices and Micron Technology added around 3% each.

The rebound is only a partial reversal of a selloff rooted in doubts over the durability of AI spending. NDTV Profit reported that Goldman Sachs said technology was the most net-sold global sector last week, with hedge funds recording their largest percentage net selling of the sector on record. Goldman traders also flagged that credit spreads for AI companies and hyperscalers had widened to their highest levels of the year, with investors increasingly assessing what could happen if AI spending growth slows. The concern has shifted from near-term earnings upgrades to the sustainability of capital expenditure and the cost of financing it, NDTV Profit reported.

"Before this selloff, I think investors were assuming that all AI investments were going to pay off," an analyst told CNBC, as reported by Semafor.

Investors get an early test of that assumption this week. Meta Platforms reports on Wednesday, with results from Tesla, Netflix and other major companies due as well. The volatility has also upended the IPO calendar, delaying several tech listings this year except possibly Anthropic's, according to Semafor.

Not everyone reads the correction as a bad omen. Investors' "jittery nerves" mean they can see weakness coming and are becoming more discerning, the CEO of Southeast Asia's largest bank told Semafor. "The market's speaking and it's not a bad thing."

The AI repricing is rippling through global markets. Easing concerns over AI cooled last week's demand for safe-haven bonds and pushed yields higher, Reuters reported. South Korea's KOSPI rebounded 4% over the past two trading sessions but remains down about 20% from its level two weeks ago, according to Reuters.

Elsewhere, the rebound was not uniform. European and UK stocks slid around 1%, with France down 1%, as curfews were imposed in parts of Paris and other cities after a weekend of riots. The unrest weighed on French bond prices and pushed the euro lower, Reuters reported. China's yuan hit a four-year high against the dollar, with official figures showing the economy grew 4.5% in the third quarter — faster than expected, but driven by booming exports that put the country on course to top last year's record trade surplus, Reuters said.

Betting markets pointed to a firmer session: Polymarket odds put an 88% probability on the S&P 500 opening higher as Wall Street shook off "Black Monday" crash fears, according to Benzinga. Monday marks the anniversary of the October 19, 1987 crash, when the Dow plunged 22.6% in a single session, NDTV Profit noted.

Reuters said all eyes are now on US earnings and whether incoming numbers and company outlooks justify still-lofty stock prices. Few doubt the technology's transformative significance, but bulls and bears are digging in for the long haul.