Chipmakers Beyond Nvidia Soar as AI Investment Broadens
Quick Look
- Chipmakers like Micron and Intel saw their market caps triple in Q2 as investors diversified AI portfolios beyond Nvidia.
- This shift reflects a broader investment in semiconductor enablers and AI infrastructure.
AI-generated summary
Why It Matters
Investors are widening their artificial intelligence portfolios beyond Nvidia, leading to significant gains for other chipmakers like Micron and Intel in the second quarter.
Chipmakers not named Nvidia soared in the second quarter as investors widened their artificial intelligence portfolios, with Micron and Intel more than tripling in value and Advanced Micro Devices not far behind.
Those three companies gained about $2 trillion in combined market cap in the period and are now the 10th, 11th and 12th most valuable U.S. tech companies.
While AI chipmaker Nvidia remains the biggest company by market cap and continues to notch massive revenue growth, the stock only gained 15% in the second quarter. Its hyperscaler customers — Amazon , Alphabet , Meta and Microsoft — showed mixed results in the period, with Meta falling by almost 2% for the worst performance in the group, and Alphabet leading the pack by gaining 24%.
"The rotation out of AI hyperscalers into AI enablers has shifted investors' euphoria into semis, driving spectacular rallies," wrote Barclays analyst Anshul Gupta, in a note on Tuesday.
Micron, one of three major computer memory producers, rose over 240% during the quarter, adding roughly $920 billion in market cap. Last week, the company reported that revenue in the latest quarter more than quadrupled due to skyrocketing memory prices from AI chipmakers. Micron's gross margin, the profit left after accounting for the cost of goods sold, jumped to 84.9% in the third quarter from 39% a year earlier.
Intel, the legacy maker of central processing units (CPUs), jumped 216% in the quarter, resulting in an added $480 billion in market cap. Intel is building U.S. chip factories while simultaneously benefiting from renewed demand for CPUs as more AI moves to devices.
AMD, Intel's rival in CPUs, added $615 billion in value after its stock price nearly tripled. AMD also makes graphics processing units, though it's far behind Nvidia in that market.
Analysts previously said market moves during the quarter could represent a "changing of the guard in AI," as investors pile into companies that make semiconductors complimentary to Nvidia's chips, and bet that a massive expansion in capital expenditures for AI data centers will boost a wider range of companies.
Other parts of the AI infrastructure supply chain aside from memory and processors also boomed.
Marvell , which makes networking gear, climbed about 200%. Arm , which supplies technology and designs to other chipmakers, rose 134% in the quarter. The VanEck Semiconductor ETF (SMH) rose 71% in the period, the fund's best quarterly performance since it started trading in 2000.
Open Questions
- Will Nvidia's growth continue to slow relative to competitors?
- Can Intel maintain its momentum in CPU and factory expansion?
- How will hyperscaler results impact future AI infrastructure investment?
