Tech firms rose Monday to claw back some of last week’s painful losses fuelled by AI regulation worries, though traders were keeping a wary eye on a probe into Nvidia boss Jensen Huang amid claims of an affair with a Chinese spy.
Chipmakers and other companies linked to the artificial intelligence boom took a hammering in the days after Tuesday’s US midterms saw Democrats sweep both houses of Congress in a rebuke to Donald Trump and his Republican party.
The results suggested voters were angry at the president’s Iran war and tariffs, which have sent prices soaring, as well as a sharp kickback against the huge data centre buildout that has taken place across the country in recent years.
That has led to speculation the new Congress will seek to wind in tech firms’ construction drive, which could put thousands of jobs at risk.
The uncertainty comes with traders already nervous about when the hundreds of billions of dollars pumped into the sector would actually see a profit.
After taking a lashing on Thursday, Wall Street enjoyed a little stability at the end of last week, and Asia — which had suffered a hammering itself on Friday — largely followed suit to start this week.
Tokyo, Seoul and Taipei — which are heavily weighted with AI-linked tech giants — led the advances.
The Japanese Nikkei 225 piled on more than three percent thanks to rallies in Kioxia, Tokyo Electron and Advantest, while SK hynix and Samsung piled on around three percent to push the South Korean Kospi sharply higher.
Taiwan’s TSMC rocketed nearly six percent to drag the Taiex five percent higher.
There were also healthy gains in Hong Kong and Shanghai, though Sydney, Wellington and Manila edged down.
“Investors will be watching carefully this week to get a sense as to whether these gains are just short-covering, bargain hunting or the beginning of something more sustainable in nature,” said Sally Auld at National Australia Bank.
“Fears around AI regulation, the outlook for (capital expenditure) and free cash flow have been the driver of risk reduction in recent weeks and these issues are not likely to be resolved with any conviction in the near term.
“Nonetheless, the valuation of many tech stocks now looks less expensive.”
– Nvidia probe –
However, a little more uncertainty was injected into markets with news that Nvidia’s board was launching an investigation into whether Huang had been targeted in a foreign espionage plot following his admission that he was unfaithful to his wife.
The New York Times reported last month that US intelligence officials concluded a Chinese executive linked to a Singapore-based data centre company called Megaspeed had been funnelling information to Beijing.
