Chipmaking stocks kicked off 2026 with a robust rally, as investors continued to pour capital into the artificial intelligence-driven sector that delivered substantial gains throughout the previous year. The enthusiasm signals a persistent belief in the transformative power of AI, despite growing concerns about market valuations.
Leading the charge was Dutch chip equipment manufacturer ASML, which saw its stock surge by 9%. Micron Technology followed suit, jumping 8% in early trading. Lam Research and Intel also posted impressive gains, rallying approximately 7% each, while Marvell Technology climbed 5%. Advanced Micro Devices (AMD) and Nvidia, key players in the AI ecosystem, added about 3% and 2% respectively. These gains build upon an already stellar performance in 2025, with AMD finishing the year up 77% and Nvidia gaining 39%.
The sustained strength in chip stocks is largely attributed to the ongoing buildout of artificial intelligence infrastructure. Major cloud providers, often referred to as hyperscalers, such as Amazon and Google, have significantly increased their capital expenditures to meet the burgeoning demand for data center capacity, which is essential for training and deploying sophisticated AI models.
This marks the third consecutive year of strong performance for the semiconductor sector, a period characterized by rapid innovation and escalating investment in AI technologies. However, the sector’s meteoric rise has not been without its cautionary notes. Investors have voiced concerns about the potential for an AI-driven bubble, given the rapid ascent of valuations and the immense capital flowing into the space.
Notable skeptics have emerged, including Michael Burry, the investor famously known for predicting the 2008 financial crisis. In late 2025, Burry disclosed short positions in Nvidia and Palantir, another prominent AI firm, signaling his belief that the market had become overheated. He also pointed to what he described as artificially boosted earnings by hyperscalers, suggesting that the reported financial health might not fully reflect the underlying operational realities.
The collective strength of chipmaking stocks is also reflected in the performance of related exchange-traded funds. The VanEck Semiconductor ETF, a barometer for the industry, climbed 4% to start the year, extending its nearly 49% rally from 2025. This ETF has now seen three consecutive years of gains, with 2023 standing out as a record year, boasting an increase of over 72%.
The continued demand for advanced semiconductor technology, driven by the insatiable appetite for AI capabilities, suggests that the momentum in this sector may persist. Analysts, such as those at Bernstein, have indicated that the “chips trade” could still have considerable room to run in 2026, implying that the underlying technological advancements and their market applications continue to justify the investor confidence.
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