Soar on AI optimism, investors propel chipmakers to record highs, driven by FOMO and strong sector news.
Global semiconductor stocks surged by over US$200 billion in market value as investors raced to capitalise on artificial intelligence (AI) developments. The rally was fueled by a series of positive headlines, including OpenAI’s US$500 billion valuation in an employee share sale and its partnership with South Korean chipmakers, as well as Intel’s reported talks to onboard Advanced Micro Devices as a client.
Korean chip stocks led the gains, with SK Hynix climbing 10% and Samsung Electronics rising 3.5%, pushing the Kospi Index to record levels. The combined market capitalisation of the Philadelphia Stock Exchange Semiconductor Index and an Asian chip gauge rose sharply in Thursday trading, according to Bloomberg calculations.
Analysts say the surge is largely driven by a fear of missing out (FOMO), with investors largely ignoring concerns about a potential bubble in the AI sector. Hebe Chen, an analyst at Vantage Markets, noted: “Tech momentum shows no sign of fading as if gravity doesn’t exist, with headwinds brushed aside and every AI headline sparking bursts of euphoria.”
Valuations for chipmakers have jumped, with Bloomberg’s Asia chip gauge trading at around 19 times forward earnings, while the SOX Index is approaching 27 times earnings, near record highs from 2024. Analysts warn that the rally may face a reality check once fourth-quarter earnings are released, but momentum appears self-sustaining for now.
