A week after the US midterms triggered the sharpest AI sell-off in more than a year, global markets staged a powerful rebound. Chip stocks led from Seoul to New York. The one notable exception was Nvidia.
Last week, the world’s AI stocks were in freefall. This week, they are rising almost as fast.
On Wall Street on Monday, the S&P 500 rose 2.35% to 7,549.94, its best day since April. Every one of its 11 sectors advanced. The Nasdaq Composite gained 2.74% to 25,253.14, and the Dow Jones Industrial Average added 1,104 points, or 2.15%, to 52,389.75.
The rebound carried into Asia on Tuesday. South Korea’s Kospi surged more than 5% at the open, so fast that the Korea Exchange briefly paused program buying under its “sidecar” rule. Japan’s Nikkei 225 climbed about 3% to reclaim the 60,000 mark. Chipmaker SK Hynix jumped about 8%, and SoftBank Group about 11%.
What changed
The sell-off began after Democrats swept the US midterm elections on 3 November. Investors feared a Democratic Congress would tighten rules on artificial intelligence and scrutinise the energy demands of data centres. On 5 November, the Nasdaq fell 5.5% in a day and entered correction territory. Kospi plunged about 9% and the Nikkei about 6% the following day.
Three things have since calmed nerves.
The first is valuations. After a sharp fall, chip stocks looked cheaper, and investors who had been waiting for an entry point stepped in. AMD jumped 13.3% on Monday after an analyst upgrade, and the Philadelphia Semiconductor Index rose nearly 7%.
The second is oil. Brent crude fell almost 6% on Monday to its lowest since 31 August, after President Donald Trump signalled no new strikes on Iran for now. Lower energy prices ease inflation fears and help almost every sector.
The third is perspective. Many investors concluded that a Democratic Congress might slow AI regulation’s direction rather than reverse the industry’s growth. Even after Monday, the S&P 500 sits about 3.4% below its October high and is up 10.3% for the year.
The Nvidia exception
Nvidia, the company most associated with the AI boom, missed the rally. Its shares fell 4.3% to $178.67, their lowest since early April, after its board launched an independent investigation into chief executive Jensen Huang’s relationship with a businesswoman US intelligence agencies suspect of spying for China. Nvidia was the only stock in the semiconductor index to fall on Monday.
That divergence matters. It shows investors separating the AI industry from one company’s governance problem. The broader trade recovered while Nvidia’s leadership question kept its shares under pressure. Nvidia is due to report quarterly results in just over a week, which will test both stories at once.
Will it impact India
Indian markets are closed on Tuesday for Diwali Balipratipada, so the reaction comes on Wednesday. Early signals point to a firm start: GIFT Nifty futures traded around 25,123 early on Tuesday, about 0.5% above their previous close.
The global rebound is a mixed blessing for India, though. Last week, India benefited as global funds pulled money out of AI-heavy markets such as South Korea and Taiwan and moved some of it into Indian shares, buying ₹38,971 crore in a week. If the AI trade recovers strongly, part of that money could flow back to chip-heavy markets.
The other big event tonight is US inflation data for October. Economists expect consumer prices to have risen 0.3% in the month, cooling from 0.6% in September. A soft reading would ease fears of a Federal Reserve rate increase in December and support global stocks. A hot one could undo much of the rebound.
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