Semiconductor stocks experienced a significant upswing on Thursday, propelled by robust earnings reports from tech giants Microsoft and Lam Research. These strong performances, particularly in the realm of artificial intelligence (AI), ignited a broad rally across the chip sector, resulting in substantial double-digit gains for many previously beleaguered semiconductor companies.
Lam Research, a key player in chip manufacturing equipment, saw its shares surge by an impressive 18%, on track for its best trading day since 1999. The company’s upbeat earnings and optimistic guidance were directly attributed to burgeoning demand driven by AI applications. Complementing this momentum, Microsoft’s stock jumped 15% after the software titan signaled robust growth in its Azure cloud computing business and announced increased capital expenditures to accommodate this surging demand. This rise positioned Microsoft for its most significant single-day gain since 2008.
The optimism extended to memory chip manufacturers as well. Samsung issued a warning indicating that the current memory chip shortage could persist into 2028, a sentiment that bolstered shares of memory-focused companies. Micron and Sandisk rallied significantly, up 18% and 26% respectively. These gains offered a welcome reversal for stocks that had recently faced pressure following underwhelming financial results from South Korea’s SK Hynix.
Semiconductor stocks have been at the forefront of the AI revolution, largely benefiting from the massive investments companies are making in memory and central processing units to build out the necessary infrastructure for AI capabilities. This infrastructure buildout includes the development of high-bandwidth memory (HBM), a critical component for advanced AI workloads.
However, the sector had recently experienced a significant correction. Concerns that the intense spending spree in AI hardware might be approaching its zenith fueled a sell-off in preceding sessions, resulting in a market value wipeout exceeding $1 trillion earlier in the week. This volatility underscored the speculative nature entwined with the rapid advancements in AI.
Beyond the major chipmakers, Arm Holdings also posted a notable gain of 7%. This surge was driven by strong demand for its newly launched in-house chip, codenamed AGI CPU, signaling a direct challenge to established technology giants in the physical silicon market. Arm CEO Rene Haas revealed that the demand for this product has already surpassed $2 billion across fiscal years 2027 and 2028. “The demand for the product is great, and more importantly, I think it underpins the fact that the market for CPUs, for agentic workloads and around inference is just key, and we’re just seeing that grow,” Haas stated in an interview. This strategic move by Arm highlights a broader industry trend toward vertical integration in chip design and development.
The overall positive sentiment was reflected in broader market indicators. The iShares Semiconductor ETF surged by 8%. Major industry players also saw significant gains: Applied Materials and Advanced Micro Devices climbed 15% and 13% respectively, while Intel added 11%. Marvell Technology gained 13%, and even the dominant force in AI chips, Nvidia, saw its stock rise nearly 3%. These movements suggest a renewed investor confidence in the long-term trajectory of the semiconductor industry, largely powered by the pervasive influence of artificial intelligence.
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