Why chip stocks are extending their gains ahead of Nvidia's CES speech

By Britney Nguyen

Lam, Applied Materials and KLA shares are some of the sector's biggest winners upon heightened enthusiasm for the data-center build-out

Nvidia CEO Jensen Huang will deliver a keynote at CES on Monday.

The semiconductor trade was mostly riding high on Monday as enthusiasm for the artificial-intelligence boom carried into the new year.

The PHLX Semiconductor Index was up about 1.7% in midday action, building on a 4% gain seen in Friday's session and a 42% rally across 2025.

Among the biggest gainers in Monday's session were shares of Applied Materials (AMAT), Lam Research (LRCX) and KLA (KLAC), each up at least 6%. Shares of Nova (NVMI), which makes measurement systems involved in chip production, were up more than 9%.

"Investors realize the great data-center build-out is still not reflected across all of the stocks that are impacted," D.A. Davidson head of technology research Gil Luria told MarketWatch.

Luria pointed to a strong earnings report from Taiwanese electronics manufacturer Foxconn Technology (TW:2354), which is a partner to Nvidia (NVDA) and Apple (AAPL). The company, also known as Hon Hai Precision Industry, reported that its revenues were up 22% for the last quarter of 2025.

The earnings results are "a reminder that as the giants like Nvidia and Broadcom (AVGO) expand their capacity, various bottlenecks get created in the [semiconductor] value chain, including for [semiconductor capital equipment] companies and memory providers," Luria said in emailed comments.

Mizuho desk-based analyst Jordan Klein said in a Monday note that "bullish headlines" and upgrades from sell-side analysts on Monday would likely propel chip stocks further. He flagged Bernstein analyst David Dai's upgrade of ASML Holding's stock (ASML), pegged on the belief that the chip-equipment provider stands to benefit from the upcoming "super cycle" for dynamic random-access memory.

See more: ASML's stock hits another record high after analyst upgrade

In a note last week, Klein said that the semiconductor-equipment sector is his favorite tech theme as large data-center commitments and broader chip demand lead chip makers to add capacity. That means they will need more equipment. With customers ordering in advance due to long wait times, Klein said companies such as Applied Materials, Lam Research and KLA have offered "confident updates."

ASML is one of Klein's favorite semiconductor capital equipment stocks for 2026, he previously told MarketWatch, because of its monopoly on advanced lithography equipment needed to manufacture the most capable chips, including Nvidia's.

ASML's U.S.-listed shares were up almost 6% during Monday morning trading after the upgrade from Bernstein.

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Meanwhile, if announcements at this week's Consumer Electronics Show "are construed as bullish 'buy the news' type events," that could further energize investors, according to Klein.

The annual trade show is "always a drive of the [semiconductor] tape," Baird managing director Ted Mortonson told MarketWatch. With announcements from Nvidia and Advanced Micro Devices (AMD) due during the event, Mortonson said to "expect more trading speculation." Both Nvidia CEO Jensen Huang and AMD CEO Lisa Su will deliver keynotes at the event on Monday. While investors are focused on management commentary about demand, Mortonson said, "the reality is there is double, triple ordering going out there."

-Britney Nguyen

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01-05-26 1245ET