AMD, Micron shares surge on a big day for chip-sector outperformance

By Hannah Pedone

There's been a dramatic 'return to AI data-center optimism,' one analyst notes

Shares of AMD were up 11% on Friday.

The chip sector outperformed the S&P 500 on Friday to a degree not seen in over a year, as artificial-intelligence mania kicked into a new gear.

Shares of Advanced Micro Devices (AMD), Qualcomm (QCOM), Intel (INTC) and Micron Technology (MU) all rose between 8% and 15% in Friday's session.

The PHLX Semiconductor Index SOX gained 5.5% on Friday and beat the S&P 500 SPX by 4.66 percentage points - the strongest level of outperformance since a 9.22-point spread seen on April 9 of last year, according to Dow Jones Market Data.

D.A. Davidson analyst Gil Luria told MarketWatch that Intel, AMD and Micron shares were seeing particular "torque" as investors piled further into chip stocks.

AMD's stock seems to be benefiting as Wall Street considers the potential for turbulence in OpenAI's deal with Broadcom (AVGO), through which the ChatGPT creator is due to buy custom chips.

According to The Information, OpenAI is attempting to get Broadcom to finance the first $18 billion phase of production for a custom chip. However, Broadcom reportedly will only do so if Microsoft (MSFT) commits to buying 40% of the chips.

Fallout from that arrangement could help foster a stronger relationship between AMD and OpenAI, Luria said.

Read more: As Nvidia earnings draw closer, here are 5 things investors need to watch

Meanwhile, shares of Intel rose after the Wall Street Journal reported that the company and Apple (AAPL) have reached a preliminary agreement to collaborate on creating chips for Apple devices.

OpenAI, Broadcom, Intel and Apple did not immediately return requests for comment.

Luria said that investors are also showing fresh appreciation for Micron, whose stock is the least expensive within the large-cap chip universe. Micron's forward price-to-earnings ratio is the lowest of all PHLX Semiconductor Index components, sitting at 8.92 on Friday.

Benchmark analyst Cody Acree told MarketWatch that shares of Qualcomm, along with those of AMD and Intel, were still enjoying a postearnings glow, after their respective reports reaffirmed growing demand for central processing units used in data centers.

Qualcomm also announced last month a partnership with an unnamed hyperscaler to provide custom silicon, with initial shipments expected later this calendar year.

Acree said the chip sector was up on a "return to AI data-center optimism after a day of sharp profit-taking." On Thursday, the iShares Semiconductor ETF SOXX, a proxy for chip stocks, closed down 2.9% - before rebounding 5.7% Friday.

See also: Why is AMD's stock up so much? 'The world has changed.'

-Hannah Pedone

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(END) Dow Jones Newswires

05-08-26 1707ET