Short-lived selloff led to broad bargain hunting as the chip sector was red hot once again.

💻 Chips Remembered Who They Are

  • Wall Street snapped a three-day losing streak Tuesday as investors dove back into semiconductor stocks. The Nasdaq Composite led the charge, climbing 1.3%, while the S&P 500 gained 0.9% and the Dow added 385 points, or 0.7%.
  • The rebound followed , when traders suddenly decided AI stocks might have become a little too expensive. "Actually... maybe they're cheap again," traders now, probably.
  • Markets largely shrugged off concerns that China's emerging AI players could derail the industry's growth story, betting instead that global demand for AI infrastructure remains far bigger than any single competitive threat.

🚀 AI Trade Gets Recharged

  • The comeback was led by familiar faces. Micron, Sandisk, SK Hynix and Seagate all surged more than 10%, while Intel, AMD and Applied Materials climbed at least 7%. The PHLX Semiconductor Index rallied 5.2%, its strongest one-day gain in a month.
  • The thinking is fairly straightforward: more AI competitors don't reduce demand for chips—they often increase it. Every company building large AI models still needs enormous amounts of computing power, memory and storage.
  • That's why many investors treated last week's selloff as less of a warning and more of a clearance sale. Expensive? Maybe. Necessary? The market still seems convinced.

📊 Earnings Take the Wheel

  • Now the focus shifts from price action to proof. after Wednesday's closing bell, followed by Tesla, IBM and Intel, making this one of the biggest weeks of the reporting season.
  • One number may matter more than any other: capital expenditure, or capex. That's the money companies spend building data centers, buying chips and expanding infrastructure. If Alphabet keeps spending aggressively, it reinforces the AI investment story. If not, investors may start asking tougher questions.
  • Futures turned lower ahead of Wednesday's session despite Tuesday's rally, with Dow futures off about 0.2%, S&P 500 futures down 0.3%, and Nasdaq futures slipping 0.8%. After a bargain hunt comes the real test: can earnings justify the shopping spree?