AI Rally Roars Back as Semiconductors and Mega-Caps Power Nasdaq Surge

The major averages opened the week with robust gains on Monday as a resurgence in semiconductor and mega-cap stocks combined with meaningful relief from two of the market’s most persistent recent headwinds. The S&P 500 jumped 1.5%, while the Nasdaq Composite surged 2.3%, with both indexes finishing near their best levels of the session. The Dow Jones Industrial Average also participated in the advance, gaining 0.7%.

Technology stocks were at the center of the rally throughout the session. The PHLX Semiconductor Index soared 4.3%, helping information technology (+2.5%) finish among the strongest S&P 500 sectors.

Advanced Micro Devices (AMD 615.52, +55.70, +9.95%) and Intel (INTC 121.78, +13.18, +12.14%) ranked among the best-performing S&P 500 components despite the absence of major company-specific catalysts, reflecting renewed momentum across the semiconductor complex. AMD reached a new all-time high and crossed $600 per share for the first time, pushing its market capitalization above $1 trillion.

The renewed strength represented a sharp shift in sentiment following recent volatility surrounding artificial intelligence stocks and debate over whether development of increasingly capable AI models should be slowed. NVIDIA (NVDA 227.38, +5.11, +2.30%) CEO Jensen Huang pushed back against AI safety concerns in a weekend interview, arguing in favor of continued development.

The broader backdrop also included preliminary U.S.-China discussions ahead of this week’s meeting between President Donald Trump and Chinese President Xi Jinping. U.S. and Chinese officials established a formal dialogue around AI safety and agreed to meet again in roughly two months, while Trump and Xi are scheduled to meet later this week. (Reuters) With no agreement emerging to slow AI development, investors remained focused on the substantial investment flowing into chips, computing infrastructure, and increasingly capable AI systems.

Mega-cap strength was equally pronounced. The Vanguard Mega Cap Growth ETF climbed 2.7%, while communication services (+3.9%) finished comfortably atop the sector standings.

Meta Platforms (META 741.24, +75.50, +11.34%) surged more than 11%, extending its September advance beyond 30%. Enthusiasm surrounding the company’s AI initiatives remained a major catalyst, particularly after its Muse personal AI agent climbed to the top position among free downloads on Apple’s App Store.

Consumer discretionary (+1.5%) also outperformed as investors returned to growth-oriented stocks. The rally nevertheless extended well beyond the largest technology companies, with seven of the 11 S&P 500 sectors finishing higher.

Real estate gained 1.1% as the simultaneous retreat in crude oil and Treasury yields created a more favorable backdrop for rate-sensitive stocks. The combination was particularly important after elevated yields and oil prices had repeatedly pressured equities during recent sessions.

Crude oil recorded an especially sharp decline. WTI futures fell $4.47, or 4.5%, to settle at $95.77 per barrel, moving decisively back below the $100 threshold.

Diplomatic developments surrounding the U.S.-Iran conflict contributed to the decline in oil. Attention turned toward this week’s United Nations gathering in New York, where Iranian President Masoud Pezeshkian is attending and President Trump has indicated openness to a possible meeting. (Reuters) The prospect of diplomatic engagement provided some relief after geopolitical tensions had driven substantial volatility across energy markets in recent weeks.

Energy (-2.5%) consequently finished at the bottom of the sector standings, with Chevron (CVX 203.78, -5.73, -2.73%) weighing on the Dow.

Utilities (-0.4%) and consumer staples (-0.4%) also finished lower as defensive areas generally lagged the growth-led rally. Health care bucked that trend, supported by a powerful advance in Moderna (MRNA 172.94, +18.90, +12.27%), which surged to multi-year highs.

Corporate developments provided additional pockets of strength. Warner Bros. Discovery (WBD 30.80, +3.00, +10.79%) surged after Paramount Skydance reached a settlement with California and other states that had challenged its acquisition of Warner Bros. Discovery, removing a significant legal obstacle to the transaction. (Reuters)

Crypto-related stocks also rallied as Bitcoin climbed above $86,000 to its highest level since January. Coinbase Global (COIN 201.05, +6.80, +3.50%) and Robinhood Markets (HOOD 123.30, +3.48, +2.90%) advanced, while Strategy (MSTR 168.50, +14.58, +9.47%) surged nearly 9.5%.

Monday’s session ultimately combined renewed enthusiasm for AI and semiconductor stocks with a substantially more accommodating macro backdrop. The 4.3% surge in the PHLX Semiconductor Index and pronounced mega-cap strength propelled the Nasdaq to a 2.3% gain, while falling crude oil and Treasury yields helped broaden participation beyond technology.

The simultaneous easing of several pressures that have driven recent market volatility—particularly elevated oil prices and Treasury yields—gave investors greater room to focus on the powerful capital-spending cycle surrounding artificial intelligence. With AMD reaching a $1 trillion market capitalization, Meta extending its September surge, and AI infrastructure stocks regaining momentum, growth stocks returned decisively to market leadership to begin the week.

Our FTinvest 11 model portfolio declined 0.77% to close at 928.43, extending the recent weakness and bringing the portfolio to its lowest levels of the current correction. The index now stands approximately 15.3% below its all-time closing high of 1,096.33, deepening the drawdown from July’s record territory and remaining well below the 1,000 level.

FTinvest 11 is now up just approximately +0.03% year-to-date, effectively returning to its starting point for 2026 after having been up more than 18% at its July peak. The latest decline has erased virtually all of the portfolio’s year-to-date gains, underscoring the severity of the reversal experienced since the summer highs. FTInvest 11 remains firmly in correction territory while continuing to follow its disciplined, value-driven approach to long-term capital appreciation.