KEY TAKEAWAYS
- Chip stocks rallied Thursday, with the PHLX Semiconductor Sector nearing a new bull market.
- Bank of America analysts expect faster growth in the AI server chip market.
- Nvidia, a key player in AI, is close to its May highs and reports earnings on Aug. 26.
After a steep July sell-off, investors are chipping in again.
Chip stocks were some of the biggest gainers in the S&P 500 and Nasdaq Thursday, a day when markets rose broadly. Shares of SanDisk (SNDK) popped 14%, while Micron Technology (MU) jumped 4% and Arm (ARM) added close to 3%. Intel (INTC) and Qualcomm (QCOM) also climbed, driving the PHLX Semiconductor Sector (SOX) up 0.5%.
Thursday’s rise brought the index to the cusp of what would mark the start of a new bull market for the measure. It’s rallied nearly 20% from recent lows after a string of strong earnings reports. Still, it remains 15% off its highs in June.
Bank of America analysts in a note Wednesday said that they see the AI server chip market growing faster than previously expected, based on strong AI compute and memory demand trends. They highlighted Advanced Micro Devices (AMD) as their top pick for the industry, citing the breadth of its product portfolio, along with Nvidia (NVDA).
Shares of AMD were little changed Thursday. They have more than doubled in value this year as the company’s data center sales soared, though they remain about 17% off their June highs. Nvidia’s stock, which ticked 0.5% higher Thursday, is less than 5% away from its May highs.
Nvidia—widely seen as a bellwether for the AI trade—is set to report earnings on Aug. 26.