Key Takeaways:
A broad pre-market rally lifted US semiconductor stocks on Thursday, with ARM recovering from an 8% intraday decline to trade 11% higher, as investors rotated back into chipmakers after a $1 trillion sector rout.
US semiconductor stocks staged a broad pre-market rebound on Thursday, with ARM surging 11% and Lam Research jumping 12%, as dip buyers returned after the sector shed more than $1 trillion in market value since Friday.
"This is a sentiment-driven snapback after an overdone selloff, not a fundamental re-rating," Michael Field, equity strategist at Morningstar, said. "The AI demand thesis hasn't changed — what changed was the price."
SanDisk rose 7.66%, Western Digital gained 7.13% and Seagate added 6.72%, while Marvell climbed 5.79%, AMD advanced 5.53% and Micron rose 5.29%. SK Hynix added 4.67%, Intel gained 4.54%, ASML rose 4.35%, TSMC edged up 3.66%, Broadcom added 2.47% and Nvidia rose 2.08%. Qualcomm narrowed its decline to 2.9% after falling as much as 8% earlier. The Philadelphia semiconductor index, which has fallen nearly 20% in the past month, was indicated higher.
The rebound comes after two days of heavy selling triggered by disappointing SK Hynix earnings and Meta's $2.40 billion legal charge that weighed on tech sentiment. Microsoft's after-hours beat — Azure revenue accelerated to 43% constant-currency growth — provided a fresh catalyst showing that cloud AI infrastructure spending remains strong despite the sector's recent volatility.
Microsoft's Azure Strength Reaffirms AI Demand
Microsoft reported Azure and other cloud revenue up 43% ex-FX, surpassing estimates of 39.6%, with annual Azure revenue topping $100 billion for the first time. The company guided for around 45% constant-currency growth in the current quarter, accelerating from Q4. Microsoft 365 Copilot now has over 30 million paid seats, and GitHub Copilot reached 50 million users. The results suggest that enterprise AI adoption is still accelerating, even as chip stocks have been hammered by fears that capital expenditure may be peaking.
The $1 Trillion Wipeout and What Changed
Since Friday's close, the world's most valuable semiconductor names have lost a combined $1.3 trillion, per CNBC and FactSet. Nvidia alone shed $238 billion. SK Hynix closed 9.6% lower in Seoul despite record quarterly profit, while Samsung fell more than 5%. The Kospi plunged 16% in two days, triggering back-to-back circuit breakers for the first time since 2000.
Charlie Dai, analyst at Forrester, said the selloff was less about weakening AI demand and more a repricing after an exceptionally strong rally. The Philadelphia semiconductor index had risen 92% over 12 months before the pullback.
Nvidia, trading at roughly 35x forward earnings, rose 2.08% in pre-market. Morgan Stanley's Joseph Moore maintained his $165 target on the stock, calling the competitive threat from in-house chips "years away from material revenue impact." For investors, the question is whether the sector's 20% drawdown represents a buying opportunity or the start of a deeper correction as AI capex growth decelerates from its current torrid pace.
This article is for informational purposes only and does not constitute investment advice.
