Coherent Jumps 17% as AI Stocks Rebound, Leading S&P 500

Coherent rose 16.8% and Monolithic Power 16.6% on Nov. 9 as AI stocks rebounded from a sharp selloff, with Teradyne up 12.7% and the S&P 500 up 2.35%.

Lead

The S&P 500 gained 2.35% to 7,549.94. The Nasdaq Composite rose 2.74% to 25,253.14, the Dow Jones Industrial Average added 2.15% to 52,389.75, and the small-cap Russell 2000 climbed 3.23%.

What Happened in the Market on November 9?

The session was a broad risk-on rally led by semiconductor and AI-infrastructure shares. Gainers outnumbered decliners by more than five to one in the S&P 500, and the Nasdaq-100 outpaced the broader index with a gain of about 3.4%.

The five best performers in the S&P 500 were Coherent, Monolithic Power, AMD, Teradyne and Flex, all with double-digit gains. The weakest were First Solar (FSLR), down 4.7%, Nvidia (NVDA), down 4.3% to $178.67, and Take-Two Interactive (TTWO), down 3.5%.

None of the leading gainers had been a leader over the prior month, which marks Monday's moves as a reversal rather than a continuation of an existing trend.

Why Did AI Stocks Rebound?

AI stocks rebounded because buyers returned after a week of heavy selling that had pushed valuations in optical and chip names sharply lower. The selloff began on Nov. 2 and deepened later in the week. On Thursday the Philadelphia Semiconductor Index fell about 7% as investors worried that data center spending could slow after the U.S. midterm elections, where Democrats secured a congressional majority and raised the prospect of tougher scrutiny of infrastructure buildouts.

Optical suppliers were hit hardest. Coherent fell about 14% on Nov. 5 even after reporting fiscal first-quarter revenue of $2.37 billion, above the $2.31 billion consensus, and adjusted earnings of $2.09 a share against $1.97 expected. The company guided second-quarter revenue to a range of $2.55 billion to $2.75 billion. Lumentum (LITE) and Applied Optoelectronics (AAOI) also fell by double digits that week. Coherent recovered about 13% on Nov. 6, and Monday's move extended the rebound.

Energy prices added support. WTI crude fell 4.38% to $86.85 a barrel and Brent dropped 5.85% to $92.57 after comments from President Trump reduced concern about military action involving Iran. Lower oil eased pressure on input costs and lifted travel shares.

What Is Driving Demand for Optical and Analog Chips?

Demand for optical and analog chips is driven by the power and connectivity needs of AI data centers. Coherent makes lasers, transceivers and materials that move data between servers and across networks. Monolithic Power designs power-management chips that deliver stable voltage to accelerators, whose electrical draw keeps rising with each generation.

Monolithic Power's latest quarter showed revenue growth of 63.1% from a year earlier, with the company citing AI-related demand and higher capacity plans. Teradyne benefits from a related dynamic: each new accelerator and memory design requires more testing time before shipment, which lifts orders for its equipment.

These businesses sit one layer below the headline accelerator makers. Their revenue depends on the pace of data center construction, so they react quickly to any change in the spending outlook, in either direction. That sensitivity explains both the severity of last week's declines and the size of Monday's gains.

Strategic Context

The split between winners and losers on Monday showed that the rebound was not uniform across AI stocks. AMD gained 13.3% after an upgrade citing accelerating data center sales and now trades with a year-to-date gain of about 137%. Nvidia moved the other way, falling 4.3% after a strong run for the broader group.

Coherent's year-to-date gain of about 22% and Monolithic Power's of about 54% are smaller than AMD's, which leaves both firms with less accumulated appreciation than the sector's most visible leader. Teradyne is up about 27% for the year.

How Did Rates and Oil Shape the Session?

Rates did not impede the rally, although yields rose. The 10-year Treasury yield rose 2 basis points to 4.88% and the 2-year yield rose 5 basis points to 4.56%, a modest move that left growth shares unharmed. Higher short-term yields reflect the market's view that interest rates will stay restrictive for longer, a backdrop that tends to penalize richly valued shares. Monday showed that earnings momentum in AI hardware can outweigh that pressure in the short term.

The decline in oil was the cleaner macro support. Falling crude lowers inflation expectations at the margin and reduces the chance that energy-driven price pressure forces a harder stance from central banks.

What Comes Next for AI Stocks?

The next test for AI stocks is whether Monday's buying holds through the remaining earnings reports and any policy signals from the new Congress. The selloff showed that policy risk, particularly around data center permitting, power supply and spending oversight, can shift sentiment faster than company results do.

The consensus view is that the underlying order books for optical, power and test equipment remain strong, given Coherent's raised guidance and Monolithic Power's growth rate. The risk lies in positioning. Stocks that rise 12% to 17% in a single session after falling 7% in the sector a few days earlier tend to remain volatile until a clear trend emerges.

Outlook

AI stocks recovered on Nov. 9 as Coherent, Monolithic Power and Teradyne posted gains of 13% to 17% and the S&P 500 added 2.35%. Strong fundamentals, falling oil and a broad market bid drove the move, but the sector remains exposed to shifts in the data center spending outlook. Near-term direction will depend on follow-through in optical and analog names and on how Washington treats AI infrastructure.