SEMIS SOAR AS MICROSOFT AND AMD FUEL AI RALLY
Chip stocks are on track for their strongest day since May 2023 on Wednesday after Microsoft reported a massive capex increase as it buys more processors in a race to dominate AI, and after Advanced Micro Devices forecast quarterly revenue above estimates, banking on strong demand for its chips.
The PHLX semiconductor index <.SOX> is surging 5.6%. A close with that gain would mark its strongest one-day percentage increase since May 26, 2023 when chips and other AI-related stocks surged after a blowout forecast from Nvidia .
Nvidia on Wednesday is hooting up 12%, lifted by expectations Microsoft and AI rivals Amazon , Alphabet and Meta Platforms would keep its top-of-the-line processors in high demand.
Microsoft said its capex exploded 78% to $19 billion in its fiscal fourth quarter, with cloud and AI-related spending accounting for nearly all of the expenditures.
Advanced Micro Devices is jumping 5% after the Santa Clara, California company ratcheted up its 2024 forecast for its AI chip sales by $500 million to $4.5 billion and said supplies would remain tight through 2025.
Nvidia's processors are the gold standard for training AI models, and AMD is widely viewed as one of the few viable competitors.
Broadcom is jumping 10%, while memory chipmaker Micron Technology and chip manufacturing equipment maker ASML Holding are both adding about 7%.
Wednesday's rally follows heavy selling in chipmakers through much of July, reflecting investor concerns that an months long rally fueled by AI optimism may have gone too far.
The PHLX index remains down about 13% from its record high close on July 10, and it is up 23% so far in 2024.
(Noel Randewich