Chip stocks surge as investors bet the AI rally isn't over

Chipmaker stocks rose sharply after a recent sell-off. Dip buyers piled into the cheaper shares, betting that the "AI theme" that has powered the bull market in recent years still has room to grow.

Which analysts back this up

Lori Calvasina, head of US equity strategy at investment bank RBC Capital Markets, discussed the market moves on Bloomberg TV. She said that beyond the AI theme's continuing influence on the market, the rebound also got support from stronger-than-expected corporate earnings.

• The rally came right after a recent drop in chipmaker stocks
• The rebound was driven by dip buying
• Investors are betting on a continuation of the "AI theme" that has driven the bull market in recent years
• Lori Calvasina, head of US equity strategy at RBC Capital Markets, provided the commentary
• An additional growth factor: stronger-than-expected corporate earnings

Why the market keeps betting on AI

Since 2023, chipmaker stocks — above all those of companies whose processors are used to train and run AI models — have become one of the main engines of growth for US stock indexes. Demand for data center compute, fueled by the rise of large language models and AI services, has driven a sharp increase in capital spending by the largest tech companies on server hardware and chips. That's why investors have traditionally treated any drop in the semiconductor sector as a buying opportunity: the core thesis of long-term growth in demand for AI infrastructure has changed little in recent years.

Market critics periodically compare the current AI infrastructure investment cycle to the dot-com bubble of the early 2000s, though supporters of the rally see demand for compute as a durable long-term trend rather than a speculative spike.

What it means

The rebound in chipmaker stocks shows that the "AI trade" remains a defining theme for the US stock market. Even after steep pullbacks, investors quickly return to buying, counting on demand for AI compute to keep growing faster than concerns about the sector overheating.