Oct. 19 — Artificial intelligence-linked stocks recovered on Monday after last week’s steep selloff, supported by falling government bond yields and easing crude oil prices. CoreWeave shares also advanced following an upgrade from Goldman Sachs.
CoreWeave shares (CRWV.O) rose 2.4% in volatile trading after losing a quarter of their value last week. Concerns surrounding the neocloud company’s $50 billion debt burden triggered a loss of investor confidence and contributed to a broader global selloff in AI and technology stocks.
“It’s going to continue to be a factor, it’s going to be a constant push-pull over time,” said Thomas Hayes, chairman at Great Hill Capital.
Goldman Sachs upgraded CoreWeave to “buy” from “neutral,” citing limited computing capacity and the company’s performance advantage over competing neocloud providers. The brokerage expects these factors to increase annual recurring revenue per megawatt over the next two years and described the recent share-price decline as a buying opportunity.
CoreWeave’s bond maturing in 2031 also strengthened, with its yield falling 19.5 basis points to 15.13%, down from more than 16% last week, according to Tradeweb data.
Other companies in the sector also rebounded. Nebius Group (NBIS.O) gained 3.4% after falling more than 31% over the previous two weeks. Data center operators Applied Digital (APLD.O) and IREN (IREN.O) advanced 8.5% and 5%, respectively.
Hayes cautioned that the recovery might be temporary.
“You could certainly see a dead cat bounce today and maybe some continuation tomorrow, but it doesn’t change the fact that the bond market is very skeptical about continuing to finance this without demanding higher and higher yields,” he said.
The AI trade weakened last week after hotter-than-expected inflation data increased expectations of interest-rate hikes. That fueled concerns that heavily indebted AI companies could face higher financing costs.
Despite the volatility, Morgan Stanley forecasts that total AI investment will reach $1.6 trillion in 2027 and $1.8 trillion in 2028.
Semiconductor stocks lead the recovery
The Philadelphia Semiconductor Index (.SOX) fell more than 11% last week, with chipmakers among the hardest-hit companies in the AI selloff.
The index lost approximately $2 trillion in market value during an eight-session losing streak that continued through Friday. On Monday, it rose 2.4%, putting it on course to end its longest losing streak since October 2008.
Intel (INTC.O) climbed 4.5% after J.P. Morgan upgraded the stock to “neutral” from “underweight.” The brokerage said increasing demand for agentic AI workloads and limited supplies of advanced chips could support upward revisions to earnings estimates through 2027.
Other major chipmakers also recovered. Nvidia (NVDA.O) rose 1.5%, Advanced Micro Devices (AMD.O) gained 3.6%, and Broadcom (AVGO.O) advanced 2.4%, following sharp declines last week.
Memory-chip manufacturer Micron Technology (MU.O) gained 4.2% after dropping nearly 15% the previous week. Data-storage companies SanDisk (SNDK.O), Western Digital (WDC.O) and Seagate (STX.O) also rose after substantial losses.
Earnings season to test investor confidence
Upcoming earnings from major technology companies and hyperscalers could provide the next test for the AI investment boom that helped drive Wall Street to record highs earlier this year.
Investors are looking for evidence that earnings growth can justify elevated valuations and offset concerns about debt and interest rates.
Facebook parent Meta Platforms (META.O), as well as Elon Musk-led Tesla (TSLA.O) and SpaceX (SPCX.O), are scheduled to report results later this week.
Semiconductor companies Lam Research (LRCX.O), Texas Instruments (TXN.O) and Western Digital are also due to release quarterly results.
“The question this quarter is not whether AI will continue to grow, it’s whether investors are still willing to pay a premium for that growth,” said Jay Woods, chief market strategist at Freedom Capital Markets.
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