Key insights
- The AI rally is gaining momentum, led by strong performance in semiconductor stocks like Micron and Marvell. Positive analyst sentiment, including significant price target increases for Micron and upgrades for Marvell, coupled with upcoming earnings reports from Marvell and Dell, suggests continued optimism. This sector strength, building on Nvidia's recent positive results, indicates robust demand for AI hardware and data center buildouts, potentially driving further gains in related tech stocks.
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It looks like full speed ahead for the AI rally to start the week.
Shares of memory chip maker Micron (MU) were recently up nearly 20%, leading other semiconductor and tech stocks higher after the long holiday weekend. The move, which comes alongside growing optimism about the AI trade after a string of strong earnings reports, pushed Micron's market capitalization above $1 trillion for the first time.
More reports due in the coming days could add to the positive sentiment. Results from AI chip designer Marvell (MRVL) and server maker Dell (DELL) are scheduled for later this week. Shares of Marvell popped by more than 10% to new highs today before paring some of those gains, while Dell climbed close to 3%. Advanced Micro Devices (AMD) and Qualcomm (QCOM) jumped over 5%, helping lift the PHLX Semiconductor Sector Index (SOX) 5%. The Roundhill Memory ETF (DRAM) was up some 15%.
Marvell's earnings report Wednesday afternoon could add fuel to the recent rally, as big tech's data center buildout drives up spending on AI hardware.
Some market watchers see more gains ahead for Micron, which has already more than tripled this year alone. Analysts at UBS in a Tuesday note more than tripled their price target for Micron to $1,625 from $535, pointing to signals of strong demand and structural changes driven by AI. That target, which would represent a new Street high well above the mean around $777 as compiled by Visible Alpha, would suggest UBS sees the stock nearly doubling in the next 12 months from recent levels.1
HSBC analysts also upgraded Marvell to a "buy" rating Tuesday. Marvell is set to report earnings after the bell Wednesday, with analysts projecting growing profits and revenues, and traders anticipating its stock could hit fresh highs following the report.2 Marvell shares have more than doubled this year.
Monday's gains follow last week's announcement of strong earnings and an upbeat outlook from Nvidia (NVDA). The company's numbers appear to have energized some corners of the AI trade, sustaining enthusiasm ahead of what could be some blockbuster IPOs later this year.
More broadly, big tech has powered the earnings season in recent weeks. Non-Magnificent 7 S&P 500 companies are on track to post 17% earnings growth for the quarter, according to FactSet, with the Magnificent 7 group of companies up more than 22%.3