TLDR
- Semiconductor stocks rebounded Monday after the PHLX Semiconductor Index fell over 9% last week
- AMD jumped 4% after Rosenblatt named it a top pick and raised its price target to $665; UBS raised its target to $700
- Micron Technology and SK Hynix each gained 5%, with Nvidia rising over 2%
- Chinese AI competition and cheaper model costs are raising questions about US chip valuations
- Markets face a high-stakes two weeks with 80+ S&P 500 earnings, a Fed meeting, and rising oil prices
Semiconductor stocks bounced back on Monday after a bruising week that saw the PHLX Semiconductor Index drop more than 9%. The recovery was broad, with gains across chipmakers, memory companies, and equipment makers.
AMD led the charge, jumping 4% after Rosenblatt named it a “top pick” and raised its price target from $490 to $665. UBS also lifted its target to $700, keeping a Buy rating ahead of AMD’s annual AI conference this week.
Advanced Micro Devices, Inc., AMD
Nvidia rose more than 2%, while Intel and Broadcom also posted gains. Marvell and Qualcomm reversed losses from Friday.
Memory stocks were among the biggest movers. Micron Technology and SK Hynix each climbed 5%. Sandisk gained more than 3%. Equipment makers ASML, Applied Materials, and Lam Research edged higher.
Chinese AI Competition Weighs on US Chip Stocks
The broader pressure on chip stocks last week came partly from China. Moonshot, a Chinese AI startup, unveiled Kimi K3, a model that runs at a much lower cost than US alternatives.
China’s growing lineup of open-weight AI models — which companies can download and run on their own hardware — has raised doubts about whether US chip demand can stay at current levels.
Deutsche Bank analysts wrote that the market reaction “reflects a reassessment of whether the industry’s current capex trajectory is sustainable if similar performance can be delivered more cheaply.”
Taiwan Semiconductor last week guided to higher-than-expected capital spending, partly due to rising tool prices, adding to cost concerns across the sector.
Alphabet’s quarterly results, due Wednesday, will be watched closely for clues on AI infrastructure spending. Bloomberg reported last week that Alphabet is behind schedule on its Gemini 3.5 Pro model.
Broader Market Faces a Critical Two Weeks
Beyond chips, US markets are entering one of the busiest stretches of the year. More than 80 S&P 500 companies are due to report second-quarter earnings this week.
Collective S&P 500 profits for Q2 are forecast to rise 26% from a year ago to just over $707 billion, according to LSEG estimates.
But risks are piling up. Oil prices jumped more than 15% last week, with Brent crude topping $90 a barrel. US military strikes on Iran, following the deaths of two servicemen over the weekend, could add further pressure.
The VIX volatility index has risen more than 22% from its mid-month low to around 18.35, signaling more turbulence ahead.
The S&P 500 has been stuck near the 7,500 mark for two months after hitting an all-time high in early June. August and September are historically the weakest months for stocks.
A Federal Reserve policy meeting is also on the calendar, with bets on a September rate hike holding at around 60%.
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