Chip-Led Rebound Steadies S&P 500 After AI-Driven Selloff

Wall Street rebounded Monday as investors bought back hard-hit technology shares, with a chip-led rally steadying the S&P 500 after last week's selloff over the durability of the artificial-intelligence boom.

The S&P 500 opened up 0.54% at 7,703.58 and the Nasdaq Composite climbed 1.05% to 26,424.21, while the Dow Jones Industrial Average slipped 0.07%, according to real-time quotes cited by NDTV Profit. Reuters similarly put the Nasdaq up 1.1% and the S&P 500 up 0.4%.

The bounce was concentrated in semiconductors. The Philadelphia SE semiconductor index snapped an eight-day losing streak — its worst run since October 2008 — with a 2.5% gain, Reuters reported. That comes after a brutal stretch: the index tumbled 11.5% last week.

Chip names led the recovery. Intel gained 5% after JPMorgan analysts upgraded the stock, while AI infrastructure provider CoreWeave rose 4% following a Goldman Sachs upgrade. Advanced Micro Devices and Micron Technology each added about 3%, NDTV Profit reported. Among other movers, Western Digital rose 6% and Amazon gained 5%, while JPMorgan Chase fell 2%, according to Reuters.

Last week's damage was severe. The Nasdaq Composite fell 4.5%, ending a four-week winning streak; the S&P 500 lost nearly 2%, its biggest weekly decline since late June; and the IT sector dropped more than 6%, its worst weekly performance since April 2025, NDTV Profit noted. Bloomberg reported that the Nasdaq 100 had just emerged from its worst week since the tariff turmoil of April 2025.

The rebound comes with investors focused squarely on whether AI capital spending will pay off. The central concern has shifted from near-term earnings upgrades to the sustainability of capital expenditure and the cost of financing it, including spending on data centers, computing capacity and other infrastructure, NDTV Profit reported.

Skepticism built last week. Technology was the most net-sold global sector, with hedge funds recording their largest percentage net selling of the sector on record, according to Goldman Sachs data cited by NDTV Profit. Goldman traders also said 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 market's speaking and it's not a bad thing," the CEO of Southeast Asia's largest bank told Semafor, noting that investors' "jittery nerves" allow them to see weakness coming and become more discerning. Semafor also reported that an analyst told CNBC that before the selloff, investors were assuming all AI investments would pay off.

All eyes now turn to earnings. Meta Platforms reports Wednesday, and Tesla is due this week, along with Netflix, GE Aerospace and RTX, according to multiple sources. The results, and the outlooks companies give, will test whether stocks still justify their valuations after the pullback, Reuters noted.

Semafor reported that this year's market volatility has delayed several technology IPOs — with the possible exception of Anthropic — as investors grow more selective.

The move also rippled beyond equities. Reuters reported that French bond prices fell sharply and the euro dropped as unrest and riots in France escalated, with curfews imposed in parts of Paris and other cities. European stocks slid about 1%, even as Asia rallied, with Indonesia's market down 3.5%.

The recovery may carry into Tuesday. Bloomberg reported that US stock futures edged higher in early Tuesday trading, extending the rebound. Betting on that direction turned overwhelmingly positive Monday morning: Polymarket odds of the S&P 500 opening higher reached 88%, per Benzinga, as traders shook off "Black Monday" crash fears.

The gauge to watch remains the chip sector. South Korea's KOSPI is up 4% over the last two sessions but remains roughly 20% below its level two weeks ago, Reuters noted — a reminder that the stabilization is early and the AI trade, while rebounding, remains polarized.