Key Highlights

  • Reports that OpenAI had paused Training of some frontier models raised doubts about how smoothly AI spending will flow.
  • Nvidia also launched an Open Agent Safety Platform, and a second group of winners emerged alongside it: cybersecurity.
  • Qualcomm was the S&P 500's worst performer, sinking to $187.48, and Intel tumbled to $116.03.
  • The 10-year Treasury Yield reached its highest level since 2007, a tough backdrop for richly valued growth stocks.

Nvidia (NASDAQ:NVDA) and the Cybersecurity names rallied while chipmakers, optical suppliers and data-center builders sank, as the AI trade fractured on Monday, September 28.

One theme, two very different days

For most of the past year, the AI infrastructure trade has moved as one: chips, networking, power and cooling rising together on the promise of an endless data-center build-out. On Monday, September 28, that unity cracked. Reports that OpenAI had paused training of some frontier models raised doubts about how smoothly AI spending will flow.

The result was a sharply divided tape. A handful of names with their own good news climbed, while a long list of hardware suppliers tumbled. The Nasdaq Composite fell 248.34 points to 26,820.38, and the Nasdaq-100 lost 331.32 points to 30,276.81.

The winners' circle

Nvidia stood out as the big exception among chipmakers.

Nvidia also launched an Open Agent Safety Platform, and a second group of winners emerged alongside it: cybersecurity. Palo Alto Networks (NASDAQ:PANW), a partner in the platform, was the S&P 500's best performer, closing around $392 after BTIG's Gray Powell raised his price target to $425 from $404. CrowdStrike (NASDAQ:CRWD) also climbed.

The losers' list

Elsewhere, the damage was wide. Qualcomm (NASDAQ:QCOM) was the S&P 500's worst performer, sinking to $187.48, and Intel (NASDAQ:INTC) tumbled to $116.03. Arm (NASDAQ:ARM) slid to $283.33. AMD (NASDAQ:AMD), Marvell (NASDAQ:MRVL) and Micron (NASDAQ:MU) all fell, and the Philadelphia Semiconductor index dropped sharply. Market reports said "the pause directly challenges the assumption of uninterrupted accelerator absorption, as frontier developers encounter safety speed bumps that delay compute clusters."

The pain spread to the picks and shovels. Optical suppliers Corning (NYSE:GLW), Coherent (NYSE:COHR) and Lumentum (NASDAQ:LITE) fell. Dell (NYSE:DELL) slid after a big Friday gain. Modine Manufacturing (NYSE:MOD) plunged to $175.04 after shares "tumbled after Margin comments during sellside webcast,", dragging Vertiv (NYSE:VRT) lower too.

Split verdicts, even within stocks

Even single names drew split reviews. Applied Digital (NASDAQ:APLD), a data-center developer, fell to about $24.79 after Rothschild & Co Redburn's Alex Haissl started coverage at Neutral with a $22 target, citing "execution, power, and pipeline-conversion risks," while Jones Trading's Kevin Dede started at Buy with a $70 target the same day.

Rising rates made everything harder. The 10-year Treasury yield reached its highest level since 2007, a tough backdrop for richly valued growth stocks. Across the S&P 500, only 125 of 503 members advanced.

AI hardware Demand gets its next verdict on Wednesday

The next big verdict on AI hardware demand arrives Wednesday, when Micron reports after the close. Analysts expect Revenue of about $50.75 billion, and any comment on data-center orders will be scrutinized in light of the OpenAI reports. OpenAI's DevDay on Tuesday could also offer clues about its model plans.

AMD's all-stock deal of about $8.2 billion for World Labs, announced after Monday's close, will be another talking point. Meanwhile, the PCE Inflation report and Friday's jobs data will steer yields, and with them the appetite for high-flying AI names.