Nasdaq Rebounds 1.1% as Chip and AI Stocks Recover From Last Week's Rout

US equities staged a broad recovery on Monday, October 19, with the Nasdaq Composite rising 1.14% to close at 26,438 and the S&P 500 gaining 0.42% to 7,691, snapping back from last week's worst sell-off since June. The Dow Jones Industrial Average slipped 0.07%, the lone major index in the red, as the session's gains were concentrated in technology and chip names.

Amazon was the standout mover, surging 4.98% to $262.45 after Morgan Stanley named the stock a top pick and raised its price target to $350, with investors also focused on upcoming Amazon Web Services growth figures in the company's October earnings report. Tesla climbed 3.76% ahead of its Wednesday results, with traders betting on progress in Optimus robotics and Cybercab developments. Intel rose 2.43% following a JPMorgan upgrade to Neutral from Underweight, while Micron gained 2.97% and AMD added 1.76% to close at $538.05 as beaten-down chipmakers broadly stabilized. CoreWeave popped as much as 7% premarket on a Goldman Sachs buy-rating initiation but closed down 0.44%.

The recovery came against a cautious backdrop. Goldman Sachs warned that hedge funds cut tech exposure at the fastest pace in a decade during the prior week, and the bank recommended defensive positioning for investors concerned the AI bull run could falter, projecting the S&P 500 to finish 2026 at roughly 7,700. Gartner separately cautioned that $3.5 trillion in AI investments may be at risk, arguing returns do not yet justify neocloud buildouts. The 10-year Treasury yield climbed to 5.14%, and WTI crude fell 2.89% after the Trump administration waived some Russia sanctions. NAHB homebuilder sentiment fell to 29 from 32, the lowest reading since June 2012.

Meta and Tesla earnings later in the week are widely seen as the next major test of confidence in the AI investment cycle, with results from both companies expected to shape near-term sentiment on AI infrastructure spending.