Following Nvidia and AMD’s blowout earnings, the AI chip rally has sent tech stocks to fresh highs. Investors now ask: what’s next for semiconductor suppliers?
AI Chip Rally Propelled by Blockbuster Earnings
Nvidia reported Q2 revenue of $39.3 billion, up 78 % year-over-year. AMD posted $9.2 billion, beating forecasts by 15 %. As a result, both shares jumped over 5 % in after-hours trading. This success indicates a strong AI chip-driven market rally, boosting tech-heavy indices to record levels. Clearly, demand for AI chips is fueling a significant rally in the market.
Index Composition and Concentration Effects
The index leans heavily on mega-cap names. Nvidia and AMD together make up roughly 8 % of its weight. They sit alongside Apple, Microsoft, and Alphabet. Thus, big moves in these stocks can sway the entire index by 0.5 % or more, contributing to the ongoing rally in AI chip investments. This concentration shows why a strong quarter from one firm can lift the sector, thereby continuing the rally.
AI Chip Rally Broadens to Suppliers
Chip-equipment makers have joined the rally. ASML shares rose 7 % after it said EUV machine orders hit a record high. Lam Research raised its annual outlook, forecasting 20 % revenue growth. Applied Materials also saw gains on strong bookings. These moves demonstrate that the impact of the chip rally has expanded across the supply chain.
AI Chip Rally Drives Investor Flows
Money is flooding into AI-focused funds. Over the past two weeks, AI ETFs took in $1.2 billion in net new cash. By contrast, broad tech funds saw $800 million. Traders also ramped up call-option volume on Nvidia, betting on further gains in the sector related to AI chips. These flows highlight the shift in portfolio weight toward AI leaders and the enthusiasm around the chip rally.
Looking Ahead to the Next Phase
Analysts expect another strong quarter for Nvidia and AMD. Supply constraints may ease later, which could temper price spikes. Nonetheless, rising data-center buildouts and AI software rollouts should keep demand high despite any slowdown. Investors should keep an eye on memory-chip names too, as AI workloads require considerable data storage. Overall, it appears that the current AI chip rally still has momentum to propel growth.