Semiconductor stocks surge on explosive AI demand

Intel’s dramatic recovery is driving one of the biggest stock-market rallies since the dot-com era as investors pour money into companies powering the artificial intelligence boom.

The Santa Clara-based tech company, which last year sold a 9.9% stake to the government, has seen its shares jump 239% year to date.

Sandisk, known for its memory chips, has surged 558% so far this year.

Semiconductor companies in the S&P 500 have added nearly $3.8 trillion in market value in just six weeks.

Demand expands beyond GPUs
The rally comes as AI companies scramble for computing power. Demand has expanded beyond high-end graphics processing units, or GPUs, to include traditional CPUs, memory chips, and data-center hardware. 

Analysts say AI agents operating around the clock are generating enormous amounts of data, creating shortages across the chip industry and pushing prices higher.

Bubble fears reappear
Chip makers are also delivering explosive earnings growth. Micron Technology expects revenue to rise to $107 billion this fiscal year from $15.5 billion in 2023 and forecasts operating profit of $77 billion after posting losses just two years ago.

Intel shares gained another 14% after reports that it reached a preliminary chip-making agreement with Apple.

Last Wednesday, Samsung’s market capitalization exceeded $1 trillion.

The rally has pushed South Korea’s Kospi index up 78% this year, far outpacing the S&P 500’s 8% rise. South Korea also became the world’s seventh-largest stock market last week.

But analysts warn the rally increasingly resembles the dot-com bubble.

Michael Burry, the famed short seller portrayed in The Big Short, said the current stock market rally reminds him of the period just before the dot-com bubble burst in 2000. He argued that stocks are climbing largely on AI enthusiasm rather than fundamentals, citing the Philadelphia Semiconductor Index’s roughly 40% jump, which marked its best six-week performance since March 2000.