Chip Stocks Rally as AMD, Nvidia (NVDA), and Micron (MU) Surge Despite Recent Selloff

Key Highlights

• Major chip stocks recovered Monday following a week where the PHLX Semiconductor Index plunged more than 9%
• AMD surged 4% after receiving a “top pick” designation from Rosenblatt with a price target increase to $665; UBS elevated its target to $700
• Micron Technology and SK Hynix both posted 5% gains, while Nvidia climbed more than 2%
• Growing Chinese AI capabilities and reduced model pricing are challenging US semiconductor valuations
• Investors face a critical fortnight with 80+ S&P 500 earnings releases, Federal Reserve decisions, and surging crude oil prices

Major semiconductor equities staged a recovery Monday following a punishing week that witnessed the PHLX Semiconductor Index tumble over 9%. The rebound extended across the industry, with chipmakers, memory manufacturers, and equipment suppliers all posting positive returns.

AMD spearheaded the rally, surging 4% after receiving Rosenblatt’s “top pick” designation accompanied by a price target elevation from $490 to $665. UBS similarly boosted its target to $700 while maintaining its Buy recommendation, citing anticipation for AMD’s annual AI conference scheduled this week.

Advanced Micro Devices, Inc., AMD

Nvidia advanced more than 2%, while Intel and Broadcom similarly recorded gains. Marvell and Qualcomm bounced back from Friday’s declines.

Memory sector stocks delivered some of the session’s strongest performances. Both Micron Technology and SK Hynix advanced 5%. Sandisk climbed over 3%. Equipment manufacturers including ASML, Applied Materials, and Lam Research posted modest increases.

Rising Chinese AI Capabilities Put Pressure on US Chip Valuations

Last week’s broader semiconductor sector weakness stemmed partially from developments in China. Moonshot, an AI startup based in China, introduced Kimi K3, a model operating at significantly reduced costs compared to American counterparts.

China’s expanding portfolio of open-weight AI models — which businesses can deploy on their own infrastructure — has sparked concerns about the sustainability of current US chip demand levels.

Deutsche Bank analysts noted that the market’s response “reflects a reassessment of whether the industry’s current capex trajectory is sustainable if similar performance can be delivered more cheaply.”

Taiwan Semiconductor’s guidance last week indicated capital expenditure projections exceeding expectations, attributed partially to increasing equipment prices, intensifying cost concerns throughout the industry.

Alphabet’s quarterly financial results, scheduled for Wednesday, will receive significant scrutiny for insights into AI infrastructure investment trends. Bloomberg recently reported that Alphabet is experiencing delays with its Gemini 3.5 Pro model development.

Markets Enter High-Stakes Period with Multiple Catalysts

Beyond the semiconductor sector, US equity markets are navigating one of the year’s most critical periods. Over 80 S&P 500 constituents are scheduled to announce second-quarter results this week.

Aggregate S&P 500 earnings for Q2 are projected to increase 26% year-over-year to slightly above $707 billion, based on LSEG projections.

However, multiple headwinds are emerging. Oil prices surged over 15% last week, pushing Brent crude above $90 per barrel. US military operations targeting Iran, following the weekend deaths of two American service members, could intensify price pressures.

The VIX volatility index has climbed more than 22% from its mid-month trough to approximately 18.35, indicating heightened market uncertainty ahead.

The S&P 500 has remained range-bound near the 7,500 level for two months after establishing an all-time peak in early June. Historical data shows August and September typically represent the year’s most challenging months for equity performance.

A Federal Reserve policy decision looms on the calendar as well, with market expectations for a September rate increase currently hovering around 60%.

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