AI stocks rebound as chipmakers rally and J&J cuts guidance on deals

AI stocks rebound Thursday gave tech-heavy portfolios a breather after weeks of pressure, with the Nasdaq Composite up more than 2.5% and tracking for its strongest session in over a month, according to CNBC. For everyday investors, the move mattered because the same rotation that lifted chip stocks also weighed on recent defensive winners like software and health care.

CNBC’s Investing Club with Jim Cramer tied the rally to a reported clearing of forced selling in artificial intelligence names. The club said early media reports indicated Situational Awareness, an AI-focused hedge fund founded by former OpenAI employee Leopold Aschenbrenner, was seeking buyers for some holdings. CNBC’s David Faber later reported the firm had agreed to sell its full public-investment portfolio to Citadel.

Why did AI stocks rebound Thursday?

Jim Cramer said before the open that the exit of leveraged hedge-fund positions could help stabilize the AI trade, CNBC reported. Leverage means borrowed money used to increase market exposure, and when those positions have to be sold quickly, they can add pressure to a falling group of stocks.

The rebound showed up most clearly in chipmakers. CNBC reported Micron rose more than 17% and Advanced Micro Devices gained more than 13%. Nvidia and Broadcom, both holdings in Cramer’s charitable trust portfolio, also advanced, though by smaller amounts.

Some companies linked to AI infrastructure also climbed. CNBC said Qnity, an electronics materials supplier, rose nearly 8%, and Corning, which makes fiber-optic cable among other products, gained almost 8%. The Investing Club said it bought some Qnity shares and raised both Qnity and Corning to a buy-equivalent rating.

The rally did not lift the whole market evenly. CNBC reported Salesforce fell more than 4% in afternoon trading, while Adobe dropped 5.5% and Workday slid 6%. Eli Lilly was down nearly 4% as investors moved money away from health care after that group had benefited during the AI sell-off.

Why did Johnson & Johnson cut guidance?

Johnson & Johnson lowered its full-year adjusted earnings-per-share outlook late Wednesday to $10.96 to $11.11, down from a prior range of $11.60 to $11.75, according to CNBC. Earnings per share, or EPS, is a company’s profit allocated to each share of stock and is a common way investors compare profitability.

CNBC’s Investing Club said the reduction was mainly tied to acquisition-related research and development charges and other deal accounting, rather than a weaker operating business. The company announced a strategic agreement and collaboration with Sail Biomedicines to develop in vivo CAR-T therapies for immune-mediated diseases. In vivo CAR-T is an emerging approach that aims to reprogram a patient’s T cells inside the body to fight disease.

Johnson & Johnson also completed its $1 billion acquisition of Firefly Bio, a deal announced in June, CNBC reported. The company expects the Sail upfront payment and equity investment to reduce adjusted operational EPS and adjusted EPS by about 18 cents in 2026 and $1.28 in 2027. The Firefly Bio acquisition is expected to reduce both adjusted operational EPS and adjusted EPS by 46 cents in 2026 and 8 cents in 2027.

Johnson & Johnson shares fell Thursday, but CNBC’s Investing Club said the decline appeared tied more to investor sentiment and rotation back into AI than to a deterioration in the company’s business. The club also noted that Johnson & Johnson has an investor call scheduled for Monday about the recent authorization for its Ottava robotic surgical system.

More earnings are on deck. CNBC said Apple and Amazon were scheduled to report Thursday night, while Linde and Eaton were set to report before Friday’s open. ExxonMobil, Chevron, AbbVie and Colgate-Palmolive were also listed among Friday reporters.

This story draws on original reporting from CNBC.