Chip stocks experienced a significant rally, marking their biggest advance since April 2025, which helped to reduce their July plunge to 21%. This monthly decline is still projected to be the largest since 2008, highlighting the extreme volatility in the sector despite strong demand for AI-related technologies and a massive prior stock market run. Analysts at UBS Chief Investment Office suggested managing concentration risk by diversifying into defensive tech stocks, while Wells Fargo Investment Institute maintained a constructive outlook for US equities, citing strong corporate earnings, AI adoption, a resilient economy, and favorable financial conditions.
The Nasdaq 100 rose 3.4%, and the PHLX chip index surged 8.2%. Microsoft Corp. was a major contributor, soaring 16% and adding approximately $450 billion to its market value, the largest single-day increase for any stock. This surge followed Microsoft's stellar forecast, which eased concerns about substantial spending on AI infrastructure. Lam Research also saw an 18% jump, its best day since 1999, driven by strong earnings and guidance linked to AI demand. In aftermarket trading, Amazon.com Inc. climbed after its results, while Apple Inc. retreated.
Several individual chip and memory stocks posted significant gains. Micron Technology rallied 18%, and SanDisk Corp. soared 26%. Applied Materials and Advanced Micro Devices each surged 15% and 13% respectively, while Intel jumped 11%. Marvell Technology gained 13%, and Nvidia rose nearly 3%. The iShares Semiconductor ETF popped 8%. Memory stocks benefited from Samsung's warning that the memory crunch could persist until 2028. This broad rally in chip stocks follows a period of intense selling pressure and mixed investor sentiment regarding the return on investment for massive capital expenditures in AI infrastructure.
