Synopsis
American chip stocks hit new peaks on Friday. Intel's strong revenue forecast boosted optimism about the ongoing AI boom. The semiconductor sector is seeing significant earnings growth. Companies like AMD and Arm also saw their shares climb. Nvidia, the world's most valuable company, also rose. This surge highlights the strong demand for AI infrastructure.The foremost stock index for chip makers - the Philadelphia SE Semiconductor Index - rose 2.5% to an all-time high and was on track to extend its record-breaking streak of single-day gains to 18. The index has gained more than 42% so far this year.
Chip stocks have emerged as some of the biggest gainers of the spending spree by tech giants on scaling up their AI infrastructure.
"The AI build-out race is still on. We are seeing solid results, especially for semiconductors and no sign that demand for AI is slowing down," said Angelo Kourkafas, senior global investment strategist at Edward Jones.
The semiconductors sub-industry alone is expected to record first-quarter earnings growth of 104.9% - much higher than the broader S&P 500 information technology sector whose earnings growth is seen at 46.2%, according to LSEG I/B/E/S data.
Intel surged 22.3% to surpass its dotcom-era peak in 2000 following a robust revenue outlook that signaled strong demand for central processors (CPUs), with rivals AMD and Arm also climbing 11.8% and 8.1%, respectively.
Nvidia, now the world's most valuable company, rose 1.2%. Much of last year's rally in chip stocks was driven by Nvidia, whose gains were fueled by strong demand for its flagship graphics processing units (GPUs).
U.S. tech stocks also seemed to shrug off a preview of a new AI model from Chinese startup DeepSeek, whose low-cost AI model rocked Wall Street last year.
"Over time, people have come to realize that actually they're not the threat that they seemed to be. The market's saying, 'Hang on, we're not going to be bitten twice with this,'" said David Morrison, senior market analyst at Trade Nation, referring to the threat from DeepSeek.
The Philadelphia chips index was last trading at around 26.6 times its 12-month forward earnings estimates, compared to around 20.7 for the S&P 500.
Analog chipmaker Texas Instruments also forecast second-quarter revenue and profit above estimates on Wednesday, sending its shares to a record high. It was last down 2.4% on Friday.
