Dip buyers pushed tech stocks higher, with Nvidia rebounding from last week's chip pullback, signaling renewed confidence in AI demand.
Nvidia, a leading AI chipmaker, rebounded 3% after Friday's 5% drop triggered by competitive concerns. Dip buying emerged as investors bet on sustained long-term AI demand, lifting the stock above key moving averages.
Investors viewed the selloff as overdone, as AI chip demand remains robust from cloud providers. The stock's RSI hit oversold levels, triggering algorithmic and discretionary dip buying.
Immediate resistance at $130, with a breakout above that level targeting $140. Support is at $115, the 50-day average. A close below would signal renewed weakness.
The VanEck Semiconductor ETF gained 2.1% as chip stocks broadly recovered. SMH holdings like Nvidia and AMD drove the bounce, with Friday's dip attracting flows back into the sector.
SMH tracks the Philadelphia Semiconductor Index and is heavily weighted toward AI enablers like Nvidia and AMD. The index bounced from 30-day lows, lifting the ETF as dip buyers re-entered.
Short-term momentum favors a bounce, but the sector remains volatile. Investors should watch for confirmation above the 50-day moving average and consider earnings season risk.
Technology shares rallied Monday as investors bought the dip in semiconductors, with Nvidia leading gains after last week's AI-leadership concerns. The rebound, driven by bargain hunting, lifted the Nasdaq-100 over 1% in early trading, signaling renewed confidence in AI demand.
Fresh tests to AI leadership, including competitive product launches and earnings concerns from major players, spooked investors, leading to a sharp selloff in the semiconductor sector.
Long-term conviction in AI-driven growth remains intact, and technical indicators flagged oversold conditions, attracting value-seeking institutional and retail buyers.
Further earnings misses or a rotation into value stocks could renew selling, especially if bond yields climb, making high-growth tech less attractive.