Original author: Jared Mitovich , the Wall Street Journal
Compiled by: Peggy, BlockBeats
Editor's Note: AI trading is shifting from "model narrative" to "hardware bottleneck".
Over the past year, discussions about AI have focused more on large-scale companies, cloud vendors' capital expenditures, and whether AI applications can truly generate revenue. However, the recent surge in US stocks shows that investors are repricing the more fundamental and scarcer links in the AI infrastructure chain: storage, semiconductor manufacturing, and the supply of high-performance chips.
The surge in the memory chip sector essentially reflects that the expansion of the AI industry has entered a more realistic phase. Training data, model parameters, inference workloads, and data center expansion all require higher-performance, larger-capacity storage and computing hardware. For terminal technology giants like Apple, rising storage prices mean cost pressure; but for chip manufacturers such as Micron, SanDisk, Intel, and Samsung, this marks the beginning of a new profit cycle.
It's worth noting that the market isn't solely driven by optimism. Wells Fargo's sentiment indicator triggered a "sell" signal for the first time since 2021, suggesting a degree of overheating in the current market. AI remains a key theme, but investors' focus is shifting: it's no longer about who tells the grandest AI story, but rather who truly controls the supply bottlenecks and can translate capital expenditures into revenue and profits.
Meanwhile, the situation in the Middle East, oil price volatility, and Federal Reserve interest rate expectations continue to disrupt the market. In other words, the new highs in US stocks are not solely driven by AI frenzy, but rather are the result of a combination of factors, including the booming AI infrastructure sector, easing geopolitical risks, and liquidity expectations.
The AI bull market is becoming more "physical." As computing power, storage, energy, and supply chains become real constraints, the market rewards not just companies that tell stories, but manufacturers that can provide critical infrastructure.
The following is the original text:
John G Mabanglo/EPA/Shutterstock
On Tuesday, investors flocked to the memory chip sector, pushing the Nasdaq Composite and S&P 500 to new highs and further solidifying the PHLX Semiconductor Index's best run since the dot-com bubble.
Since the end of March, the semiconductor index has risen 54%, marking its best performance in a 25-day trading range since March 2000. As demand for key specialized chips for artificial intelligence surges, chipmakers are ramping up production to meet market demand.
Rising storage prices are increasing costs for tech giants like Apple, but this is a boon for the entire chip manufacturing industry. Tuesday's gains propelled Intel's stock up 13%, pushing its market capitalization to approximately $544 billion, surpassing Oracle and Johnson & Johnson. SanDisk, Micron, and Qualcomm all saw gains of over 10%, driving the tech-heavy Nasdaq Composite Index up 1%.
Ohsung Kwon, chief equity strategist at Wells Fargo Securities, said that companies that design, manufacture, or sell computing chips needed for high-intensity AI tasks are the biggest beneficiaries of the current large-scale AI infrastructure development. "That's the real bottleneck," he said.
Kwon stated that AI trading has entered a healthier cycle: investors are shifting their focus from capital expenditures to the technology's potential for commercial monetization. This shift in focus was also reflected in the earnings reports of tech giants like Amazon and Google last week—traders are more concerned with whether these companies' massive investments in AI have truly translated into revenue.
Despite the ongoing AI hype, Wells Fargo's sentiment indicator triggered a "sell" signal for the first time since November 2021. Kwon described the recent financial market rally as a "sugar rush," a signal that suggests investors should start adding protective measures to their portfolios.
Reports indicate that Apple is considering having Intel and Samsung manufacture main chips for its devices in the United States, fueling investor optimism and driving up Intel's stock price. Samsung's stock also rose by approximately 5% in the South Korean market.
Among major U.S. stock indexes, the Nasdaq led the gains, with the S&P 500 rising 0.8% and the Dow Jones Industrial Average gaining 0.7%, or 356 points. All 11 sectors of the S&P 500 rose, with materials and technology leading the gains; the Russell 2000 small-cap index rose 1.8%, hitting a record high. The financial services sector opened lower after Coinbase and PayPal announced layoffs, but subsequently recovered its losses, ultimately closing essentially flat.
On Tuesday, investors' hopes rose that the United States and Iran would avoid a renewed full-scale confrontation following Monday's clashes in the Persian Gulf.
Near-month Brent crude futures fell 4% to $109.87 a barrel. On Monday, the most actively traded crude contract closed at its highest level in nearly four years after Iran attacked a key oil terminal in the United Arab Emirates and ships in the Strait of Hormuz. However, U.S. Defense Secretary Pete Hegseth downplayed the impact of the attacks on Tuesday, stating that the four-week ceasefire agreement with Tehran remained in effect.
"At present, the situation does not appear to have escalated substantially, which has put the market at ease," said Bill Northey, senior investment director at Bank of America Asset Management.
He added that although hostilities in the Middle East appeared to have eased somewhat on Tuesday, the conflict continues to influence future U.S. economic data and the Federal Reserve's interest rate decisions. For example, if the Strait of Hormuz can be safely and fully reopened, it will weaken market expectations for higher inflation and push down the 10-year U.S. Treasury yield.
Northey stated, "Our baseline assessment is that this volatility is likely to continue."
