Wall Street closes mixed on Monday as AI chip stocks rebound, though geopolitical tensions and interest-rate concerns weigh on broader markets.

The Nasdaq Composite rose 0.9% (220.23 points) to 25,929.66, while the S&P 500 gained 0.3% to 7,405.73. The Dow Jones Industrial Average fell 0.2% to close at 50,786.01. AI semiconductor stocks recovered after plunging on Friday.

Four major hyperscalers have raised their AI capital expenditure budget to $750 billion for 2026, with that figure set to cross $1 trillion next year and likely to rise further beyond 2027. This sustained demand is supporting the rebound in AI chip stocks despite broader economic headwinds.

Concerns about sticky inflation and strong jobs data have kept the Fed from signaling rate cuts, with the CME FedWatch tool showing more than 50% probability of a rate hike by year-end. Higher interest rates are detrimental to growth-focused AI companies requiring large capital investments.