US Stocks Rally as Tech Sector Soars, Chipmakers Post Record Gains
The US stock market experienced a significant surge on Monday, driven by gains in the technology sector and optimism surrounding chipmakers. The semiconductor industry saw substantial growth, with stocks rising across the board. NVIDIA shares climbed about 3.4% after Foxconn, a key server partner of Nvidia, reported record fourth-quarter revenues and a robust sales forecast.
Foxconn's Record Revenues Boost Optimism in Chipmakers
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.
The optimism surrounding Foxconn's announcement is attributed to the company's significant role as a server partner of Nvidia. As such, Foxconn's record revenues are expected to have a positive impact on Nvidia's stock prices. This optimism extends beyond Nvidia, with other chipmakers also experiencing gains.
Broader AI Optimism Boosts Tech Sector
Chip stocks received additional support 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.
The growing demand for AI-driven products is driving growth across the semiconductor industry. As companies continue to invest heavily in AI research and development, the sector is expected to experience significant expansion. This optimism is reflected in the performance of chip stocks, which are rising across the board.
Inside the Industry Prospects
Recent data from the Semiconductor Industry Association (SIA) highlights the growth of the global semiconductor industry. In 2024, global semiconductor sales hit $53.1 billion in August, marking a year-over-year increase of 20.6% and a sequential rise of 3.5%. If this trend continues, it is expected that the US will become a significant player in the global semiconductor market.
The SIA's report also forecasts that the United States will more than triple its semiconductor manufacturing capacity between 2022 and 2032. This would represent the highest rate of growth in the world during that period. The report estimates that the US will increase its share of advanced (less than 10nm) chip manufacturing to 28% of global capacity by 2032.
The Impact of CHIPS Act
The SIA-Boston Consulting Group report notes that if there had been no CHIPS Act, the United States would have secured only 9% of global capex by 2032. The CHIPS Act has provided significant support to the semiconductor industry, enabling companies like Nvidia and Foxconn to invest heavily in AI research and development.
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 ETF (SMH)
- Invesco PHLX Semiconductor ETF (SOXQ)
- Invesco Semiconductors ETF (PSI)
- Strive U.S. Semiconductor ETF (SHOC)
- Columbia Semiconductor and Technology ETF (SEMI)
These ETFs have lower company-specific concentration risks and have surged 53.3%, 32.8%, 31.4%, 28.9% and 28.6%, respectively, in the past year.
Conclusion
The US stock market has experienced a significant surge driven by gains in the technology sector and optimism surrounding chipmakers. The semiconductor industry is expected to experience significant expansion as companies continue to invest heavily in AI research and development. Investors can play semiconductor ETFs for exposure to the entire industry and not just the AI boom.