Chip Stocks Need More Than AI Hype to Sustain Recent Gains

Semiconductor stocks have rallied sharply this year as the sector is swept in the artificial intelligence (AI) frenzy.  Despite falling chip sales, some chip-related stocks are climbing on hopes of future sales related to AI.  The biggest benefactor of the AI frenzy is Nvidia (NVDA), whose shares are up +89% this year. Also, Advanced Micro Devices (AMD), the only real rival to Nvidia as a maker of graphic chips used in AI applications, is up more than +34%.

Advanced Micro Devices rallied more than +5% Thursday after Microsoft (MSFT) said it was helping finance AMD’s expansion into AI processors.  Also, AMD CEO Su noted that her company was well-positioned to capitalize on growth in AI computing.  Just a day earlier, AMD tumbled more than -9% after giving a weak revenue forecast for the current quarter due to tepid personal computer (PC) sales.