Tech stocks rebound as earnings test AI trade outlook

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Tech stocks rebound on AI bets

Highlights

S&P 500 and Nasdaq Composite rally Monday, driven by a rebound in AI shares after last week's 2% and 4.5% respective declines.
Chip stocks lead gains as the iShares Semiconductor ETF aims to snap a nine-day losing streak, while the iShares MSCI South Korea ETF jumps 4%.
Investors focus on Meta Platforms and Tesla earnings this week, as analysts note tech sector fundamentals are unchanged but market conditions remain fragile.

Earnings week puts rebound under scrutiny

As reported by CNBC, the S&P 500 and Nasdaq Composite rally Monday, helped largely by a rebound in artificial intelligence shares after a steep pullback in the previous week.

Chip stocks surge, with the iShares Semiconductor ETF on track to end a nine-day losing streak. The Magnificent Seven also outperform, while memory chip makers advance and the iShares MSCI South Korea ETF, heavily weighted toward SK Hynix and Samsung Electronics, jumps 4% after suffering sharp losses over the past week.

The latest move follows a difficult stretch for broader markets. The S&P 500 falls nearly 2% last week, marking its worst weekly decline since late June, while the Nasdaq Composite drops 4.5% over the same five-day period.

Investors say the current bounce looks tied in part to oversold conditions, but they also indicate that a more durable advance depends on results from large technology companies. Meta Platforms and Tesla are among the closely watched names this week, while SpaceX reports after the bell Tuesday.

Ajay Rajadhyaksha, global chairman of research at Barclays, says technology earnings are central this week, adding that fundamentals are unchanged but fragile market action keeps the firm neutral on risk assets and duration. Katie Stockton, founder of Fairlead Strategies, says in a Monday note that the S&P 500 and Nasdaq need to hold support levels to avoid confirming a deeper breakdown, although broad short-term oversold conditions suggest support can hold for now.

In our earlier article on the S&P 500’s push toward 8,000, we outlined how the midsummer, AI-led rally was heading into a tougher test as investors looked to third-quarter earnings to justify further gains. The piece also flagged concentration and breadth risks—alongside pressure from higher oil prices and elevated Treasury yields—arguing that results from a small group of megacap and chip-related leaders could determine whether the index can keep advancing.

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