Chip stocks reached historic milestones in Q2 as investors widened their AI bets to include companies other than Nvidia. Micron, a memory chip maker, saw its shares surge over 240%, while Intel gained 216% and AMD rose 186%. Together, the three firms added $2 trillion to their market capitalizations.
Although Nvidia remains the largest company by market value and still posts huge revenue growth, its stock only increased by 15% in Q2. Its main cloud customers - Amazon, Alphabet, Meta, and Microsoft - had mixed performances: Meta fell nearly 2%, the worst in the group, while Alphabet led with a 24% gain.
Barclays analyst Anshul Gupta wrote in a Tuesday note, "The rotation out of AI hyperscalers into AI enablers has shifted investors' euphoria into semis, driving spectacular rallies."
Earlier, some analysts described the shift as a "changing of the guard in AI," with investors buying into firms that produce complementary chips to Nvidia's, expecting that soaring capital spending on AI data centers will benefit many companies beyond Nvidia.
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In the memory segment, Micron recently reported that its latest quarterly revenue more than quadrupled, driven by surging memory prices from AI chip demand. Its gross margin climbed to 84.9% in the third quarter, up from 39% a year earlier.
The firm is building semiconductor manufacturing facilities in the United States and simultaneously capitalizing on rising CPU demand as AI workloads move to edge devices.
AMD also produces GPUs but trails Nvidia significantly in that market.
Beyond memory and processors, other AI infrastructure suppliers also surged. Marvell Technology, which produces networking components, gained about 200%. Arm Holdings, which licenses chip designs and technology, rose 134% in the quarter.
The extraordinary rally in these chip stocks reflects a broader shift in investor sentiment. As hyperscalers continue to pour billions into AI data center construction, component makers beyond Nvidia are capturing a larger share of that spending. Memory prices have soared due to high-bandwidth chip demand, while traditional CPU makers benefit from the expansion of AI inference workloads at the network edge. This confluence of factors has created a wave of optimism that propelled the entire semiconductor sector to new heights.
The rally was further supported by strong quarterly reports and forward guidance from the three major players. Micron's revenue quadrupled year-over-year, Intel's shares surged on CPU demand from AI edge deployments, and AMD's GPU business, though smaller than Nvidia's, captured incremental AI infrastructure spending. Marvell and Arm each posted triple-digit gains, underscoring the breadth of the AI chip ecosystem.
The VanEck Semiconductor ETF (SMH) advanced 71% during the period, marking its best quarter since its 2000 launch.
The rally extended well beyond the three major players.
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