U.S. Stocks Rally Amid Optimism in Technology Sector
The U.S. stock market experienced a significant surge on Monday, driven by gains in the technology sector and optimism surrounding chipmakers.
Foxconn’s Record Revenues Boost Chipstocks
Semiconductor stocks saw a substantial increase after Foxconn, a key partner of Nvidia, announced record fourth-quarter revenues and a robust sales forecast. This development has reinforced optimism about AI-driven growth.
- Nvidia Shares Climb 3.4%: Nvidia shares rose by approximately 3.4%, boosted by the Foxconn announcement and CEO Jensen Huang’s keynote at the CES tech conference. During his presentation, updates on the Blackwell chip were revealed.
- Huang Outlines AI Ambitions: Keynotes outlined the company’s AI ambitions for both consumer and enterprise users in the year ahead. Huang introduced several new software technologies designed to train humanoid robots and power a wide range of AI applications.
Micron Technology Leads Gains in Semiconductor Sector
Meanwhile, Micron Technology MU stock surged almost 10.5%, leading gains in the semiconductor sector. AMD shares rose over 3%, benefiting from the sector-wide rally.
- Qualcomm and Broadcom Climb: Qualcomm QCOM and Broadcom AVGO climbed approximately 1.5% each.
- Taiwan Semiconductor Manufacturing Co Hits Record High: Taiwan Semiconductor Manufacturing Co TSM also hit a record high.
- ASML and ASMI Advance: ASML gained nearly 7% on Jan. 6, 2024, while ASMI rose about 6%.
- Infineon and STMicroelectronics Advance: Germany’s Infineon and STMicroelectronics both advanced around 7%.
Foxconn’s Record Revenues
Foxconn, known internationally as Hon Hai Precision Industry, announced record-breaking fourth-quarter revenues of 2.1 trillion New Taiwan dollars ($63.9 billion), a 15% year-over-year increase. The growth was driven by demand for cloud and networking products, including AI servers designed by Nvidia, despite slight declines in consumer electronics like smartphones.
Broad AI Optimism Boosts Tech Sector
Chip stocks also received a lift from Microsoft’s announcement of an $80 billion investment in data centers for AI workloads in 2025. This underscores the strong demand for GPUs (graphics processing units) from Nvidia and other suppliers to power advanced AI models.
Inside the Industry Prospects
The Semiconductor Industry Association (SIA) announced that global semiconductor sales hit $53.1 billion in August 2024, marking a year-over-year increase of 20.6% and a sequential rise of 3.5%. A report by the SIA-Boston Consulting Group forecasts that the United States will more than triple its semiconductor manufacturing capacity between 2022 and 2032.
Chip ETFs in Focus
Against this backdrop, investors can play semiconductor exchange-traded funds (ETFs) for exposure to the entire industry and not just the AI boom. These ETFs include:
- VanEck Semiconductor ETFSMH:
- Invesco PHLX Semiconductor ETFSOXQ:
- Invesco Semiconductors ETFPSI:
- Strive U.S. Semiconductor ETFSHOC:
- Columbia Semiconductor and Technology ETFSEMI
