After a shaky March, chip stocks have made a dramatic comeback in April, with investors feeling more confident about the booming Artificial Intelligence (AI) sector. The Nasdaq’s PHLX Semiconductor Sector Index, which tracks 30 major U.S.-traded chip companies, dropped by 6.3% in March. However, it reversed course last month, jumping an impressive 35.2% since the beginning of April.
Intel stood out with its best day since 1987, driven by strong earnings that beat expectations and positive future forecasts. Nvidia’s market value even crossed the $5 trillion mark before its latest earnings report. Apple’s stock also rose after reporting better-than-expected revenue growth and guidance.
Many other U.S. chip giants, including AMD and Micron, have seen their stock prices surge, along with several leading European semiconductor firms. Bruce Bateman, chief analyst at Omdia, described the recent rally as “historic,” noting winning streaks not seen since the 1970s.
This rally reflects renewed confidence in the AI infrastructure boom and stronger earnings reports, according to David Miller, a senior portfolio manager at Catalyst Funds. He also noted that demand seems to be spreading beyond just a few well-known AI success stories. In the U.S., the belief that AI demand is translating into actual revenue growth and higher earnings estimates is fueling this positive sentiment.
Concerns about the massive AI spending plans by large tech companies, announced in early 2026, had led to a $1 trillion selloff in February. But investors have become more confident in recent weeks. Michael Field, chief equity strategist at Morningstar, explained that “continued positive news flow and earnings results from the AI infrastructure players has allowed investors to get a better level of comfort with the size of the capital expenditures taking place, which has led to sentiment turning positive.”
However, not everyone is ignoring the bigger picture. Bob Savage, head of markets macro strategy at BNY, pointed out that some of the surge is related to the Iran war, as chip orders have increased due to worries about potential supply chain disruptions.
Bateman warned that while the market sees a clear growth story, it might be “overlooking a massive wall of physical reality.” He highlighted that the Iran war has created critical bottlenecks impacting core chipmaking. For example, helium, essential for chip manufacturing, has seen significantly reduced exports, and some European companies have faced delays in chip deliveries from Asia due to disrupted flight paths.
The U.S. data center expansion is also reportedly facing delays and shortages of key equipment like transformers. “We aren’t seeing a lack of interest; we’re seeing a lack of capacity,” Bateman stated.
Despite these concerns, other analysts remain very optimistic, believing that the demand for computing power will continue to grow, driving these large AI infrastructure projects. Miller believes the sector can keep climbing if three things hold true: “Hyperscaler capex stays resilient, earnings estimates continue to move up, and investors remain convinced that AI infrastructure spending is producing real returns.”
Recent updates further underscore the activity in the AI and chip world. Anthropic is reportedly seeking new funding at a $900 billion valuation. Samsung Electronics announced an eightfold increase in first-quarter operating profits, setting a new record thanks to its booming chip business. Meanwhile, a major data center company has paused AI infrastructure investments in the Middle East due to the Iran war. The Department of Defense is expanding its use of Google’s Gemini AI model, while top researchers are leaving big tech to launch their own heavily funded AI startups.
