Global chip stocks jump as blowout Micron results reignite AI rally

Global chip stocks surged on Thursday (June 25) after Micron Technology's blockbuster results reignited the AI-driven rally, as investors grew more confident about persistent demand and tightening supply.

Micron, a key supplier for Nvidia's AI chipsets alongside South Korean chipmakers, surged more than 17 per cent to a record high after it forecast quarterly profit and revenue well above expectations.

The company, whose shares have more than tripled in value so far this year, also said its customers had committed US$22 billion (S$28.5 billion) to lock in supplies of memory chips, underscoring how AI-driven demand is tightening the market.

The stock added roughly US$189 billion in market value at a price level of US$1,216.8, taking its total market capitalisation to US$1.39 trillion. 

It also briefly surpassed the market valuations of Meta Platforms and Tesla.

Other US-listed chip stocks also rose, with storage and memory rivals Western Digital up 5.6 per cent and SanDisk jumping more than 15 per cent, while Seagate Technology rose 6.7 per cent. 

The broader Philadelphia SE Semiconductor Index added 1.9 per cent

"For the wider market, this feeds into the AI supply chain, where memory has been a source of nervousness. 

Greater supply visibility and continued tightness support pricing across the ecosystem, and this should go some way to abating the recent nervousness around tech," said Ben Barringer, head of technology research at Quilter Cheviot.

The rally slowed across other chip-related stocks though, with US-listed shares of Arm Holdings and Marvell down over two per cent each in choppy trading. 

Nvidia, the world's most valuable company, also fell 2.3 per cent.

Qualcomm added 3.8 per cent after the chip designer said it expects to generate US$15 billion in sales from its data centre business by 2029 as it moves beyond its core smartphone chips.

Global tech shares fell earlier this week, with US chip stocks retreating from record highs as investors reassessed lofty AI-driven valuations and questioned how quickly heavy spending on data centre infrastructure would translate into profits.

Micron, a key supplier for Nvidia's AI processors and the only US-based producer of high bandwidth memory (HBM) chips, said demand continues to far outstrip supply, allowing it and rivals SK Hynix and Samsung Electronics to charge a premium.

Analysts at D.A. Davidson said Micron has entered "a new era" marked by unprecedented visibility and a memory cycle that "is far from over". 

It bumped the stock's price target to a Wall Street high of $2,000, nearly double its last close of $1,048.51.

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Tech stocks from Seoul to Frankfurt rally

In Europe, Dutch chip-equipment maker ASML, the region's most valuable company, rose 2.6 per cent following two days of heavy losses triggered by investors taking profits after a record surge.

Infineon, STMicroelectronics and ASM International rose between 1.9 per cent and 2.3 per cent, helping provide the main support for benchmark indices.

Europe's broader tech index rose 0.5 per cent.

In Asia, South Korean chip heavyweights SK Hynix and Samsung Electronics closed higher at 13 per cent and 5.3 per cent, respectively.

"We expect tight conditions to persist beyond calendar 2027," Micron CEO Sanjay Mehrotra said, pointing to strong demand and structural supply constraints.

JP Morgan analysts said the company's shift toward multi-year customer agreements is "fundamentally transforming" its business model and underpinning a more durable earnings profile.

Little sign of demand destruction

JP Morgan said it saw little sign of demand destruction, adding that tight supply should persist and recommending investors "add on any dips", while maintaining an overweight stance on South Korea.

"Memory shortages were triggered by the explosive need for AI factory infrastructure ... and we believe the role of memory as a strategic asset in Artificial General Intelligence remains unchanged," analysts at the US bank said.

South Korea's SK Hynix also said on Wednesday it plans to raise up to US$29.4 billion through a US stock market listing, boosting investor expectations of a reduced valuation gap between the chipmaker and its smaller US rival Micron.

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