AI chip stocks surge 9% as tech giants fuel semiconductor rally

After a five-day selloff that erased 14% from the VanEck Semiconductor ETF, AI chip stocks rebounded sharply on July 30 as earnings reports and rising capital expenditure plans from technology giants restored confidence in the sector's growth trajectory.

"Demand forecasts from several major customers are already running ahead of our initial expectations," AMD Chief Executive Officer Lisa Su said during the company's Advancing AI 2026 event on July 23, where the chipmaker announced a multi-billion-dollar partnership with Anthropic and outlined an AI roadmap through 2030.

The Philadelphia Stock Exchange Semiconductor Index climbed more than 9%, while the S&P 1500 Semiconductor & Semiconductor Equipment Index jumped as much as 16%, its biggest intraday gain since April. AMD led with a 15% advance, Intel gained 13%, and Micron Technology rose 15%. Nvidia added 3.2%, Broadcom rose 4.3%, and Taiwan Semiconductor Manufacturing Co. gained 7.5%. Lam Research surged 23% after its own earnings report, while Arm Holdings added 6.8% following its quarterly results. Qualcomm fell 3.5% post-earnings.

The rally highlights a dramatic leadership shift within the semiconductor sector this year. Intel has surged 124% year to date on its strongest revenue growth in 15 years, while AMD has doubled on a 57% jump in data center revenue. Yet the two best performers carry the most stretched valuations: AMD trades at 142 times trailing earnings, while Intel has no trailing P/E after reporting losses over the past 12 months. By contrast, Nvidia — up just 3% this year — trades at 29 times earnings, the most grounded multiple among the group.

AI Infrastructure Spending Fuels Broader Rally

The semiconductor rebound spilled into power and infrastructure stocks, showing the market is pricing in a multiyear AI buildout cycle. The S&P 500 Construction & Engineering Index surged as much as 16%, its biggest gain since 2008. Bloom Energy jumped 28%, Vertiv added 4.4%, GE Vernova rose 8.4%, and Caterpillar gained 4.2%. Data center operators also rallied, with Hut 8 climbing 18%, Iren gaining 27%, and TeraWulf rising 19%.

The breadth of the rally suggests investors are looking beyond chipmakers to the companies that build and power the data centers housing them. Hyperscalers including Amazon, Microsoft, Meta Platforms, and Oracle have committed tens of billions of dollars to AI infrastructure, with capital expenditures increasingly compressing free cash flows. Any slowdown in orders from these customers could trigger significant revenue declines for semiconductor manufacturers, making the current spending trajectory a key variable for chip stocks.

Valuations Tested as Earnings Season Intensifies

The VanEck Semiconductor ETF, which attracted $1.6 billion in inflows despite its recent decline, trades at 49.6 times earnings — more than double the S&P 500's 22.7 times multiple. The iShares Semiconductor ETF pulled in $6.13 billion in new capital, suggesting institutional investors are using the pullback to add exposure rather than exit.

AMD's fiscal second-quarter results, scheduled for Aug. 4, represent the next major test for the sector. The company guided for revenue of about $11.2 billion, implying 46% year-over-year growth. Wall Street remains bullish, with 35 of 45 analysts rating the stock a "Strong Buy" and an average price target of $580.66, implying 35% upside from current levels. KeyBanc analyst John Vinh estimates AMD's partnership with Anthropic alone could generate roughly $27.2 billion in revenue from a full 2-gigawatt deployment of MI450 accelerators beginning in the first half of 2027.

For investors, the July 30 rally offers a snapshot of a sector caught between two narratives: the long-term promise of AI-driven demand and the near-term reality of stretched valuations. AMD's 142x earnings multiple leaves little room for error when it reports next week, while Nvidia's 29x multiple offers a margin of safety that has kept its stock nearly flat this year. The divergence suggests the market is rewarding execution over hype — a dynamic that will be tested when AMD delivers its results.

This article is for informational purposes only and does not constitute investment advice.