Wall Street Focuses on Semiconductor Stocks Amid Market Volatility and AI Boom
2 Sources
2 Sources
[1]
Wall St Week Ahead: Wall Street zeroes in on semiconductors after turbulent week
U.S. semiconductor stocks are under close scrutiny after mixed reports from international tech leaders triggered market volatility. Upcoming earnings from Texas Instruments, Lam Research, and Advanced Micro Devices are crucial for gauging future demand, especially in AI applications, which directly influence overall market trends.U.S. semiconductor companies will get a closer look from investors in coming weeks, after diverging reports from two industry leaders abroad set off a volatile few days of trading. Because semiconductors are key components in a broad array of products, chipmakers and related equipment companies are closely followed for insight into the economy. Wall Street also watches the stocks as indicators of overall market trends. This year, the industry has been at the center of the artificial intelligence enthusiasm powering the stock market to record highs, highlighted by massive gains for Nvidia NVDA.O, the AI poster child. "It's vitally important that these chip stocks hold up," said Matt Maley, chief market strategist at Miller Tabak. "If they go down, it weighs on the rest of the market." The Philadelphia SE Semiconductor index .SOX has pulled back after climbing more than 40% in the first half of the year. It is now up about 25% in 2024 against a 22.5% gain for the benchmark S&P 500 .SPX. Semiconductor and related equipment stocks account for 11.5% of the weight of the S&P 500. Nvidia, which is approaching Apple AAPL.O as the largest company by market value, holds a 6.8% weight in the index. The sector had its share of drama in the past week. Chip shares tumbled on Tuesday after equipment maker ASML ASML.AS, Europe's biggest tech firm, projected lower-than-expected 2025 sales and bookings. But the group rebounded on Thursday after Taiwan Semiconductor Manufacturing Co 2330.TW, which produces advanced chips used in AI applications, reported a forecast-beating 54% jump in quarterly profit. Following the dueling announcements, the SOX semiconductor index is down 2.5% so far this week, with the S&P 500 up 0.5%. The semiconductor group could take its next cues from imminent corporate reports, including from Texas Instruments TXN.O and equipment company Lam Research LRCX.O next week. Texas Instruments' products are used in a broad range of applications, including automotive and industrial, and could be a barometer for whether such areas that have been sluggish for the chip industry are starting to rebound, said Daniel Morgan, portfolio manager at Synovus Trust. Overall, Morgan said, the semiconductor group is trading at 5.6 times price-to-book valuation, which he said was fair, noting that group topped 8 times price-to-book levels in 2021. Advanced Micro Devices' AMD.O earnings report the following week will give some initial insight into AI-related demand ahead of Nvidia's highly anticipated report due late next month. If AMD's 2025 forecast for its AI chips is strong, "that's going to be bullish for the sector," Maley said. The semiconductor reports are due in a busy week for U.S. corporate earnings overall, with well over 100 S&P 500 companies set to report, including Tesla TSLA.O, Coca-Cola KO.N and IBM IBM.N. "The (semiconductor) group is very important, if nothing else because of the market cap that it carries," said Chuck Carlson, chief executive officer at Horizon Investment Services.
[2]
Wall Street zeroes in on semiconductors after turbulent week
NEW YORK (Reuters) - U.S. semiconductor companies will get a closer look from investors in coming weeks, after diverging reports from two industry leaders abroad set off a volatile few days of trading. Because semiconductors are key components in a broad array of products, chipmakers and related equipment companies are closely followed for insight into the economy. Wall Street also watches the stocks as indicators of overall market trends. This year, the industry has been at the center of the artificial intelligence enthusiasm powering the stock market to record highs, highlighted by massive gains for Nvidia, the AI poster child. "It's vitally important that these chip stocks hold up," said Matt Maley, chief market strategist at Miller Tabak. "If they go down, it weighs on the rest of the market." The Philadelphia SE Semiconductor index has pulled back after climbing more than 40% in the first half of the year. It is now up about 25% in 2024 against a 22.5% gain for the benchmark S&P 500. Semiconductor and related equipment stocks account for 11.5% of the weight of the S&P 500. Nvidia, which is approaching Apple as the largest company by market value, holds a 6.8% weight in the index. The sector had its share of drama in the past week. Chip shares tumbled on Tuesday after equipment maker ASML, Europe's biggest tech firm, projected lower-than-expected 2025 sales and bookings. But the group rebounded on Thursday after Taiwan Semiconductor Manufacturing Co, which produces advanced chips used in AI applications, reported a forecast-beating 54% jump in quarterly profit. Following the dueling announcements, the SOX semiconductor index is down 2.5% so far this week, with the S&P 500 up 0.5%. The semiconductor group could take its next cues from imminent corporate reports, including from Texas Instruments and equipment company Lam Research next week. Texas Instruments' products are used in a broad range of applications, including automotive and industrial, and could be a barometer for whether such areas that have been sluggish for the chip industry are starting to rebound, said Daniel Morgan, portfolio manager at Synovus Trust. Overall, Morgan said, the semiconductor group is trading at 5.6 times price-to-book valuation, which he said was fair, noting that group topped 8 times price-to-book levels in 2021. Advanced Micro Devices' earnings report the following week will give some initial insight into AI-related demand ahead of Nvidia's highly anticipated report due late next month. If AMD's 2025 forecast for its AI chips is strong, "that's going to be bullish for the sector," Maley said. The semiconductor reports are due in a busy week for U.S. corporate earnings overall, with well over 100 S&P 500 companies set to report, including Tesla, Coca-Cola and IBM. "The (semiconductor) group is very important, if nothing else because of the market cap that it carries," said Chuck Carlson, chief executive officer at Horizon Investment Services. (Reporting by Lewis Krauskopf; Editing by Ira Iosebashvili and Richard Chang)
Share
Share
Copy Link
Investors are closely watching U.S. semiconductor stocks following mixed reports from international tech leaders, with upcoming earnings reports expected to provide insights into AI-related demand and overall market trends.
Semiconductor Stocks Take Center Stage on Wall Street
The U.S. semiconductor industry has become a focal point for investors, as recent conflicting reports from international tech leaders have triggered market volatility. With the sector playing a crucial role in the artificial intelligence (AI) boom that has driven the stock market to record highs, upcoming earnings reports from major chip manufacturers are eagerly anticipated
1
2
.Market Impact and Importance
Semiconductor stocks, accounting for 11.5% of the S&P 500 index, are closely monitored as indicators of overall market trends and economic health. The Philadelphia SE Semiconductor index (SOX) has seen a 25% increase in 2024, outpacing the S&P 500's 22.5% gain
1
. Nvidia, a standout performer in the AI sector, now holds a 6.8% weight in the S&P 500 and is approaching Apple as the largest company by market value2
.Recent Market Volatility
The past week has been tumultuous for chip stocks. On Tuesday, shares tumbled following equipment maker ASML's lower-than-expected projections for 2025 sales and bookings. However, the sector rebounded on Thursday after Taiwan Semiconductor Manufacturing Co reported a 54% jump in quarterly profit, exceeding forecasts
1
2
.Upcoming Earnings Reports
Investors are now turning their attention to imminent corporate reports from U.S. semiconductor companies. Texas Instruments and Lam Research are set to report next week, with Advanced Micro Devices (AMD) following the week after
1
. These reports are expected to provide crucial insights into various aspects of the industry:- Texas Instruments: Its diverse product range could indicate a potential rebound in sluggish areas like automotive and industrial applications
2
. - AMD: The report will offer initial insights into AI-related demand, setting the stage for Nvidia's highly anticipated report due late next month
1
.
Related Stories
Valuation and Market Sentiment
Daniel Morgan, portfolio manager at Synovus Trust, notes that the semiconductor group is currently trading at 5.6 times price-to-book valuation, which he considers fair. This is significantly lower than the peak of 8 times price-to-book levels seen in 2021
2
.Broader Market Implications
The performance of semiconductor stocks is seen as critical for overall market health. Matt Maley, chief market strategist at Miller Tabak, emphasizes, "It's vitally important that these chip stocks hold up. If they go down, it weighs on the rest of the market"
1
. The upcoming earnings season, which includes reports from over 100 S&P 500 companies such as Tesla, Coca-Cola, and IBM, will be closely watched for further indications of market trends2
.As the AI boom continues to drive market enthusiasm, the semiconductor industry remains at the forefront of investor focus, with its performance likely to have far-reaching implications for the broader technology sector and the stock market as a whole.
References
Summarized by
Navi
[2]
Related Stories
Weekly Highlights
Weekly Highlights
Today's Top Stories
Your Daily Dose of Curated AI News
Don’t drown in AI news. We cut through the noise - filtering, ranking and summarizing the most important AI news, breakthroughs and research daily. Spend less time searching for the latest in AI and get straight to action.
