AI stocks rebound as CoreWeave jumps on Goldman Sachs upgrade

ETMarkets.com

CoreWeave rose 3.4% after losing more than a quarter of its value last week, as concerns around its $50 billion debt load weighed on the broader AI trade. Goldman Sachs upgraded the stock to “buy” from “neutral”, saying tight computing capacity and CoreWeave's performance advantage over rival neocloud firms could support higher annual recurring revenue per megawatt over the next two years.

The brokerage also viewed the recent pullback as a buying opportunity, according to Reuters.

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Chip stocks stage a sharp recovery

The rebound comes after one of the steepest weekly selloffs for AI and semiconductor stocks this year. The Philadelphia Semiconductor Index fell more than 11% last week and is now up 2.8%, putting it on course to snap an eight session losing streak, its longest since October 2008, Reuters reported.

The index has shed around $2 trillion in market value during the losing streak, highlighting how sharply investor sentiment around the AI trade has shifted.

On Monday, Intel climbed 5.6% after J.P. Morgan upgraded the stock to “neutral” from “underweight”. The brokerage pointed to rising agentic AI workloads and tight supplies of advanced chips as potential drivers of positive earnings estimate revisions through 2027.

Nvidia gained 0.6%, AMD rose 4.3% and Broadcom advanced 2.2%, with all three recovering after steep declines last week. Micron Technology also climbed 3.8% after sliding nearly 15% last week.

The recovery extends to other AI infrastructure plays. Neocloud rival Nebius Group rose 4.5%, while data centre operators Applied Digital and IREN gained 9% and 5.7%, respectively.

The shift comes as investors reassess whether higher interest rates could derail the AI investment cycle. Last week's hot inflation reading raised expectations for future US Federal Reserve rate hikes and fuels concerns about borrowing costs for highly indebted AI companies.

“We believe it is too early to see any meaningful impact from higher rates. Also, we expect AI capex to continue to strengthen into 2027,” Ohsung Kwon, chief equity strategist at Wells Fargo, told Reuters.

Earnings become the next test for AI trade

With the immediate selling pressure easing, attention now turns to earnings from major technology companies and hyperscalers. Investors are looking for evidence that strong earnings growth can justify elevated valuations and offset concerns around debt and interest rates.

Meta Platforms, Tesla and SpaceX are due to report results later this week, while semiconductor companies Lam Research and Texas Instruments, along with Western Digital, are also scheduled to release quarterly results.

"The question this quarter isn't 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.

That earnings test could determine whether Monday's rebound marks a broader stabilisation in the AI trade or simply provides a pause after last week's sharp correction.