Semiconductor stocks have made their strongest start to a year since the dotcom bubble, as AI spending keeps the cocaine nose jobs of Wall Street frothing.
The Philadelphia Semiconductor Index, which tracks 30 big US-listed chip makers, has climbed roughly 75 per cent since the start of the year.
That puts it on course for its best annual return since 1999, according to Bloomberg data cited by the Financial Times. The index has added more than $5 trillion in market value across two months, or about 1.5 times the value of the UK’s FTSE 100.
The rally has been fuelled by bullish bets on future chip earnings, as AI chips and the kit needed for new fabs remain in short supply.
Meta, Alphabet, Amazon and Microsoft have set aside $725 billion this year for data centres and the gear needed to keep AI humming.
ValueWorks founder Charles Lemonides told the FT: “Hyperscaler demand is locked and loaded. The semiconductor and memory groups are minting money and look like they will continue to do so for years.”
OpenAI and Anthropic are expected to chase valuations of more than $1 trillion when they go public later this year, despite burning cash on data centres.
JPMorgan chief Jamie Dimon said: “It’s gung ho, folks. There’s a lot of exuberance out there. Right now it’s good.”
Dimon then spoiled the party mood by pointing to earlier bursts of exuberance before downturns in 1972, 1986, 2000 and 2007.
“That doesn’t give me comfort,” Dimon said.
This year’s surge has stretched beyond the Magnificent Seven: Alphabet, Amazon, the Fruity Cargo Cult Apple, Meta Platforms, Microsoft, Nvidia and Tesla.
Nvidia remains the world’s biggest public company, with a market value of $5.1 trillion. Yet Intel, AMD and Arm have outpaced Nvidia’s share gains this year, helped by hopes that AI infrastructure is shifting beyond graphics processors.
Chipzilla’s shares hit an all-time high set during the dotcom bubble after it gave a bullish outlook for CPU demand in April. Its fortunes changed after the US government took a 10 per cent stake last year, while Nvidia and SoftBank pumped in billions.
AMD shares have jumped more than 120 per cent this year after the outfit signed major chip supply deals with Meta and OpenAI. SoftBank-backed Arm has surged more than 160 per cent after deciding it fancies selling its own chips.
The UK group, which counts Nvidia as a major client, expects that shift to drive a fivefold increase in revenue over five years. Memory chip stocks have joined the fun as data centre demand creates a global shortage.
High-bandwidth memory makers Micron and SK Hynix joined the small club of companies valued above $1 trillion on successive days this week. UBS said Micron shares could more than double over the next 12 months, despite already rising about 860 per cent in the past year.
