AI stocks got hit hard on Monday, but the rest of Wall Street held its ground. The reason? Oil prices gave back

AI stocks got hit hard on Monday, but the rest of Wall Street held its ground. The reason? Oil prices gave back almost all of an early jump, and that gave investors just enough breathing room to keep the broader market from falling apart.**

Here's what happened, and why it matters.

## The Scoreboard

The damage was concentrated in one place. The **Philadelphia Semiconductor Index plunged 5.9%** — its worst day since July . Nvidia fell 3.4%. Intel dropped 5.6%. Micron and Marvell each lost more than 5%. Corning got crushed, down over 13% .

But the headline indexes told a much calmer story. The **S&P 500 fell just 0.48% to 7,620**. The **Dow dropped only 0.29% to 52,421**. And the **Nasdaq Composite lost 0.55% to 26,187** .

That divergence is the whole story. AI hardware got sold off hard. Everything else held steady.

## Why AI Stocks Got Hammered

The trigger was a weekend of public soul-searching from the people building AI.

Anthropic CEO **Dario Amodei published an essay calling for the industry to slow down**. OpenAI's **Sam Altman agreed**. **Elon Musk agreed**. When the leaders of the most competitive AI labs all say the same thing at the same time — "we need to pace this" — investors hear something very specific: the AI infrastructure boom might not be as unstoppable as they assumed .

"If some of the main players are now saying, wait, we need to slow down a bit, that adds to uncertainty," said Berenberg strategist Chris Armstrong .

The chipmakers are the most direct beneficiaries of AI spending. If that spending slows, their revenue growth slows. So they got sold.

## Why the Rest of the Market Held

Here's the part that matters for your portfolio.

**Oil gave back its gains.** Brent crude surged as much as 5% early Monday on Middle East escalation fears. Then it faded. By the close, WTI was up just 1.34% at $101.39 a barrel . The catalyst was President Trump saying Russia and Ukraine agreed to stop attacking energy targets. That one headline removed the inflation panic that had been building all morning .

**Software stocks rallied.** ServiceNow jumped 7.6%. Adobe rose 4.7%. Workday gained over 4%. The logic is counterintuitive but simple: if AI development slows, software companies don't have to worry as much about being disrupted by it. They become relative safe havens .

**Cybersecurity surged.** CrowdStrike soared nearly 14%. Palo Alto Networks gained over 13%. Zscaler and SentinelOne each jumped more than 15% . When the market gets nervous about AI going rogue, security spending looks less like a cost and more like a necessity.

## The Real Overhang: Bonds and the Fed

The 10-year Treasury yield briefly **broke above 5%** on Monday — its first time since 2023 . That's the number that actually drove the day's trading.

"The worst part of the stock selloff coincided with the 10-year yield breaking above 5%," said Steve Sosnick, chief strategist at Interactive Brokers .

Higher yields pressure stock valuations, especially for high-growth tech names. And the Fed meets on Wednesday, with markets pricing in an **87% chance of a rate hike** . That's the backdrop that made AI stocks so vulnerable.

## What to Watch

The Fed decision on Wednesday is the main event. A hike is almost fully priced in, but the press conference and dot plot will determine whether this is a one-off or the start of a cycle.

If yields stay above 5% and oil holds above $100, the pressure on AI hardware stocks isn't going away. But if oil keeps fading and the Fed signals a pause, the rotation into software and defensive names could continue.

For now, the market is doing what it's done all year: punishing the crowded trade and rewarding the unloved one. Monday, that meant selling chips and buying everything else.