Global technology shares staged a partial recovery on Monday, clawing back some of the steep losses suffered after the US midterm elections, as investors weighed the implications of a Democratic sweep and fresh scrutiny of Nvidia's chief executive.
The rebound was led by Asian markets, where chipmakers and other AI-linked companies had been hit hardest in the previous session. Tokyo's Nikkei 225 climbed more than 3%, buoyed by gains in Kioxia, Tokyo Electron and Advantest. In Seoul, SK hynix and Samsung each rose around 3%, lifting the Kospi sharply. Taiwan's TSMC surged nearly 6%, dragging the Taiex up 5%. Hong Kong and Shanghai also posted healthy gains, though Sydney, Wellington and Manila edged lower.
The bounce follows a brutal week for the sector, triggered by the Democrats' victory in Tuesday's midterms, which was widely read as a rebuke to President Donald Trump's policies, including his tariffs and the Iran war. Voters also appeared to push back against the massive data centre buildout that has spread across the United States in recent years, raising speculation that the new Congress may seek to curb tech firms' construction plans—a move that could threaten thousands of jobs.
That uncertainty compounds existing worries about when the hundreds of billions of dollars poured into AI infrastructure will translate into profits. "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 of 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 adds to sector jitters
Adding to the sector's challenges, Nvidia has opened an independent investigation following reports that its CEO Jensen Huang had a relationship with a suspected Chinese spy. The probe, first reported over the weekend, has put the company's governance under the spotlight and could have implications for its dealings in China, a key market for its AI chips.
The development is part of a broader pattern of heightened scrutiny on tech giants, both in the US and Europe. In recent months, European campaigners have stepped up protests against data centre expansion, with Greenpeace unfurling a giant banner at a Swiss data centre site and activists storming a Microsoft facility in Amsterdam. These actions reflect growing concerns about the environmental and social costs of the AI boom, a theme that resonates across the continent.
Meanwhile, investors are also keeping an eye on the release of fresh US inflation data later this week, after figures on Friday showed the economy created far more jobs than expected in October. The data will be crucial for the Federal Reserve as it decides whether to raise interest rates at its December meeting, with markets currently pricing in an 80% chance of a hike.
The combination of political, regulatory and monetary policy uncertainties suggests that Monday's gains may be fragile. As Auld noted, the underlying issues driving the sell-off have not been resolved, and the sector could remain volatile in the near term.
For European investors, the ripple effects are significant. Many European tech firms and suppliers are tied to the global AI supply chain, and any slowdown in US data centre spending could have knock-on effects on the continent's tech sector. At the same time, European policymakers are grappling with how to balance the economic benefits of AI with concerns about energy use and data privacy, as seen in the campaigns demanding a freeze on new data centres.
As the week unfolds, market watchers will be looking for signs of whether the rebound is sustainable or merely a temporary respite. The Nvidia probe, in particular, could cast a long shadow over the sector, given the company's central role in the AI boom.
