Chip Stocks Rally in AI Trade Revival After Plunge: Markets Wrap
(Bloomberg) — A rebound in giant chipmakers lifted stocks as dip buyers emerged amid speculation that the artificial-intelligence trade that has powered the bull market has more room to run.
The advance halted a two-day rout in semiconductor firms, with traders betting the industry’s investment boom will continue to support solid earnings. The Nasdaq 100 climbed 1.5%. Broadcom Inc. jumped after expanding its partnership with Apple Inc. SK Hynix Inc. kicked off the formal marketing process for its US listing while investors awaited Samsung Electronics Co.’s results on Tuesday. The dollar rose. Long-dated bonds underperformed.
While chipmakers just wrapped up their best quarter on record, the rally has wavered as concerns over rising competition, potential overcapacity and the payoff from massive AI investments spurred sharp intermittent pullbacks. That has raised the stakes for the sector, with lofty expectations leaving little room for disappointment.
After a blowout sales forecast from Micron Technology Inc. last month failed to bolster confidence, investors are waiting to hear from industry bellwethers for further clues on AI chip demand. The focus will also be on capital expenditure projections from hyperscalers after recent concerns that they may be overspending on AI.
“This week, investors will look for signs that tech’s recent volatility is stabilizing,” said Mark Haefele at UBS Chief Investment Office. “Markets will also assess whether recent pressure on hyperscaler shares changes the perceived path for AI capital expenditure.”
Signs that spending plans remain intact would help reassure investors that demand for AI infrastructure remains durable, Haefele said. Conversely, further evidence of caution could keep attention focused on valuations, financing needs, and concentration risk.
Investors who recently scorned hyperscalers are starting to come back as the companies show they can mint profits while spending hundreds of billions of dollars on AI infrastructure, according to Max Kettner at HSBC Holdings Plc.
“We are getting a bit of a summer melt-up into July and August,” Kettner told Bloomberg Television’s Surveillance. “The hyperscalers going into a full-on bear market in May and June — going down 20% — that really is too much.”
On the economic front, the US service sector expanded in June at a slightly slower pace, but firms boosted payrolls as cost pressures eased.
“We’ve seen stronger markets and stronger economies over the last 30 years, but we’ve rarely seen a healthier intersection of the two,” said Mark Hackett at Nationwide. “Earnings continue to surprise to the upside, valuations have become more reasonable, inflation expectations are easing, and the economy is holding up without overheating.”
Corporate Highlights:
Microsoft Corp.’s Xbox plans to eliminate 3,200 jobs, or around 20% of its staff over the next year, as part of a massive reorganization to spur growth in the struggling gaming division. Xbox will also divest four of its video-game development studios and is beginning the process to part ways with a fifth. Lockheed Martin Corp. agreed to buy naval defense business Ultra Maritime, which focuses on submarine detection systems, for $3.45 billion as the US defense giant broadens its undersea weapons portfolio. Honeywell International Inc. spinoff Solstice Advanced Materials Inc. will acquire Element Solutions Inc. in a cash-and-stock deal valued at about $14.5 billion, creating a market leader in the specialty chemicals sector. Nvidia Corp.’s server assembly partner Hon Hai Precision Industry Co. reported a bigger-than-expected 40% jump in quarterly sales and said AI demand is growing further. Michael Saylor’s Strategy Inc. sold $216 million of Bitcoin last week, marking the first major step in the financing overhaul the company unveiled in recent days after a prolonged slump in the cryptocurrency and its own shares. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.6% as of 11 a.m. New York time The Nasdaq 100 rose 1.5% The Dow Jones Industrial Average was little changed The Stoxx Europe 600 fell 0.4% The MSCI World Index rose 0.4% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1418 The British pound was little changed at $1.3357 The Japanese yen fell 0.6% to 162.36 per dollar Cryptocurrencies
Bitcoin fell 1% to $62,029.9 Ether fell 1.4% to $1,750.94 Bonds
The yield on 10-year Treasuries was little changed at 4.49% Germany’s 10-year yield was little changed at 2.94% Britain’s 10-year yield was little changed at 4.79% Commodities
West Texas Intermediate crude rose 0.2% to $68.86 a barrel Spot gold fell 0.9% to $4,137.83 an ounce ©2026 Bloomberg L.P.
