Semiconductor stocks across Asia and Europe staged a broad recovery on Monday after last week's selloff, but the rally came with a significant caveat: Nvidia, the company at the center of the artificial intelligence trade, fell sharply in premarket trading as a board investigation into CEO Jensen Huang added another headache for U.S. investors.

The rebound followed a difficult stretch for AI-related equities. After Democrats won control of Congress, investors began questioning whether Washington could impose new restrictions on the massive data centers being built to power artificial intelligence, a concern reflected in the broader data center backlash that helped drive Thursday's steep selloff. Friday brought some bargain hunting, and Monday's Asian session showed buyers were not finished. Demand remains for the companies that make chips and the machines used to produce them, even as investors grow markedly more nervous about the cost of expanding AI infrastructure.

Taiwan's chip giants lead the rebound

Taiwan's Weighted Index surged as much as 6.7% intraday before closing Monday up 4.94% at 41,664.7, its biggest one-day gain since July 31. Two drivers stood out: Taiwan Semiconductor Manufacturing Company (NYSE: TSM), which climbed more than 6%, and electronics manufacturer Hon Hai Precision Industry, better known as Foxconn, which jumped more than 8%.

The gains matter because TSMC manufactures the advanced processors used by major chip designers, while Foxconn builds electronics and server hardware. When investors buy both, they are effectively wagering that demand across the technology supply chain can withstand the political noise. That does not mean Washington's data center debate has disappeared — it means traders are willing to take another look at companies they dumped last week.

South Korea also produced winners. Samsung Electronics (KRX: 005930) advanced 2.7%, and SK Hynix (KRX: 000660) rose 4.77%. Both companies supply Nvidia, for which memory chips are essential to AI computing.

Europe joined the recovery as well. The Stoxx 600 technology index added 1.3% in early trading, while Dutch semiconductor equipment maker ASML (NASDAQ: ASML) gained 1.7%. BE Semiconductor Industries and ASM International also advanced. Because these companies make equipment used in chip production, they allow investors to gain exposure to the industry without betting on a single AI company.

The rebound extended Friday's mixed session on Wall Street, where the Nasdaq Composite rose 1.09% to 24,579.42 and the S\u0026P 500 gained 0.31% to 7,376.86, even as the Dow Jones Industrial Average dropped 237.33 points, or 0.46%, to close at 51,285.73. By Monday morning, futures looked considerably healthier: Dow futures gained 0.76%, Nasdaq 100 futures rose about 0.5%, and S\u0026P 500 futures added 0.34%.

Nvidia's scandal leaves U.S. chip investors uneasy

The awkward part of Monday's rebound was Nvidia (NASDAQ: NVDA), which was down more than 5% in premarket trading amid the fallout from Huang's disclosed affair with Alice Huang, described as a Chinese spy. As Cryptopolitan previously reported, U.S. intelligence agencies had already been concerned that Alice, who is associated with cloud company and Nvidia customer Megaspeed, might have passed information to Beijing. Those remain allegations, not proven findings. Huang told Nvidia employees he had an affair with Alice and apologized, and an Nvidia spokesperson said he intended to continue running the company "without interruption."

Other American chip names did not escape the nerves. Intel (NASDAQ: INTC), Marvell Technology (NASDAQ: MRVL), Qualcomm (NASDAQ: QCOM) and Arm (NASDAQ: ARM) each lost more than 1% early in the premarket session, while a proxy for Nvidia shares traded on Hyperliquid had dropped 2% over the preceding 24 hours.

According to a semiconductor market snapshot from Yahoo Finance, Broadcom (NASDAQ: AVGO) carried a $1.402 trillion valuation, SK Hynix was valued at roughly $898 billion, Micron (NASDAQ: MU) at $781 billion and Advanced Micro Devices (NASDAQ: AMD) at $736 billion. Intel stood at $299 billion, Texas Instruments (NASDAQ: TXN) at $254 billion, Qualcomm at $177 billion, Analog Devices (NASDAQ: ADI) at $176 billion and Marvell at $127 billion.

Attention now turns to the remainder of the earnings calendar, which features CoreWeave (NASDAQ: CRWV), Cisco (NASDAQ: CSCO) and Applied Materials (NASDAQ: AMAT), with markets watching for signs of continued investment in AI infrastructure. Inflation data will also be in focus, with the consumer price index due Tuesday and the producer price index on Friday.

Source: Cryptopolitan