NEW YORK — U.S. technology stocks rallied Monday, with the Nasdaq Composite jumping nearly 2% as investors returned to artificial intelligence and semiconductor shares following a sharp selloff last week.
The recovery came as Wall Street prepared for a major week of corporate earnings, including results from Meta Platforms and Tesla, which could provide a crucial test for investor confidence in the technology sector and the broader artificial intelligence boom.
At 11:42 a.m. Eastern Time on Monday, the Nasdaq Composite was up 463.92 points, or 1.78%, at 26,603.96. The S&P 500 gained 0.89% to 7,727.91, while the Dow Jones Industrial Average rose 0.18% to 52,093.44.
The rebound followed a difficult week for technology stocks as investors grew increasingly concerned about rising borrowing costs and the enormous amount of capital required to finance new AI infrastructure.
AI Stocks Rebound After Last Week’s Selloff
Artificial intelligence-related companies were among Monday’s biggest winners. CoreWeave, one of the companies at the center of the recent AI infrastructure selloff, rose more than 3% after Goldman Sachs upgraded the stock to “buy” from “neutral.”
The company had fallen more than 25% during the previous week as investors questioned its debt load and the financing required to support continued expansion.
Other AI infrastructure companies also recovered. Nebius Group gained about 4.7%, while IREN rose roughly 6.5%. The moves suggested that some investors were willing to return to the AI trade after last week’s sharp decline, although concerns about debt and the cost of building data centers have not disappeared.
The renewed volatility reflects a larger question facing Wall Street: whether the enormous spending required to build the next generation of AI infrastructure will eventually produce enough revenue and profit to justify current valuations.
Business Innovative News has previously examined how the AI investment boom is powering U.S. economic growth while also increasing pressure on inflation, borrowing costs and other parts of the economy.
Semiconductor Stocks Lead Technology Rally
Chipmakers were among the strongest performers Monday. Broadcom climbed about 3.2%, while Micron Technology jumped roughly 5.3%.
The Philadelphia Semiconductor Index gained approximately 3.7%, putting the index on track to break an eight-session losing streak — its longest such stretch since October 2008.
Intel also rallied, rising about 5.8% after JPMorgan upgraded the stock to “neutral” from “underweight.”
The rebound is significant because semiconductor companies remain at the center of the AI investment cycle. Demand for advanced processors, memory chips, networking equipment and data-center infrastructure has surged as technology companies spend heavily to expand computing capacity.
But that growth has increasingly been accompanied by questions about financing. Higher interest rates make expensive infrastructure projects more costly, while investors are paying closer attention to whether revenue growth can keep pace with the billions of dollars being invested in AI.
Amazon Stock Surges More Than 5%
Amazon was another major winner Monday. Shares of the e-commerce and cloud-computing giant rose about 5.2% after Morgan Stanley named Amazon its top stock pick.
Amazon has become an increasingly important player in artificial intelligence through Amazon Web Services, its Trainium AI chips and growing investments in data-center infrastructure.
The rally helped lift the consumer discretionary sector, which was among the best-performing groups in the S&P 500 on Monday. Technology stocks were also among the market leaders, reversing some of the pressure that drove major indexes lower last week.
Meta and Tesla Earnings Become the Next Big Test
Investors are now turning their attention to corporate earnings.
Meta Platforms and Tesla are both scheduled to report quarterly results on Wednesday, making their reports two of the most closely watched events of the week.
For Meta, investors are likely to focus heavily on artificial intelligence spending, data-center expansion, advertising growth and whether the company’s massive infrastructure investments are translating into stronger revenue and profits.
Tesla faces a different set of questions.
Investors will be watching vehicle margins, capital spending and the company’s long-term investments in artificial intelligence, autonomous driving, robotaxis and the Optimus humanoid robot.
SpaceX is also scheduled to report results Tuesday, adding another major technology company to a week already packed with earnings announcements.
Strong earnings could help restore confidence in technology stocks after last week’s decline.
Weak results or unexpectedly aggressive capital-spending plans, however, could revive concerns that companies are investing too much money in AI before generating sufficient returns.
AI Financing Concerns Remain
Despite Monday’s rally, the concerns that triggered last week’s selloff remain unresolved. Building AI infrastructure requires enormous amounts of capital for advanced chips, data centers, electricity, cooling equipment and high-speed networking systems.
Some of the largest technology companies can finance those investments using strong cash flows and large balance sheets.
Smaller AI infrastructure providers are more dependent on debt markets. That distinction has become increasingly important as interest rates remain elevated.
Business Innovative News recently reported that rising Treasury yields have already created pressure for technology stocks by increasing borrowing costs and making government bonds more competitive with riskier investments.
Those pressures are particularly important for companies whose valuations depend heavily on profits expected many years into the future.
Falling Oil Prices Give Wall Street Additional Support
Another factor supporting stocks Monday was a decline in crude oil prices. Brent crude futures were down about 1.7% at around $108 a barrel during the session.
Lower oil prices can ease concerns about inflation because energy costs affect transportation, manufacturing and household expenses throughout the economy.
That matters for investors after September U.S. inflation accelerated, complicating expectations for Federal Reserve monetary policy.
Persistently high inflation could keep interest rates elevated for longer, which would generally create additional pressure on highly valued technology and growth stocks.
Nasdaq Recovery Puts Earnings in the Spotlight
Monday’s rally shows that investor appetite for artificial intelligence stocks has not disappeared. But the market has entered a more demanding phase.
For much of the AI boom, investors rewarded companies simply for announcing larger investments in chips, data centers and artificial intelligence products. Increasingly, Wall Street wants evidence that those investments can generate sustainable profits.
That makes this week’s earnings particularly important. If Meta, Tesla and other major technology companies deliver strong results and convincing outlooks, the rebound in the Nasdaq and AI stocks could gain momentum.
If earnings disappoint — or companies announce another wave of expensive AI spending without clear returns — last week’s concerns could quickly return.
For now, technology stocks are recovering, and the Nasdaq is once again leading Wall Street higher. The next test will be whether corporate earnings can justify the extraordinary amount of money continuing to flow into artificial intelligence.
