Investors are betting on AI chips on the stock market

• During the Independence Day holiday, investors, driven by AI, bought, and investors sold shares in enterprise software companies.
• The PHLX Semiconductor Index rose 6.3% on average over the quarter, while the Dow Jones Industrial Average gained 5.4%, driven by Apple’s growth.
• Overall, the main reason for the rally was the AI-infrastructure buildout, while the energy of the rally was explained by a single set of the most important macroeconomic factors.

During the Independence Day holiday, investors, driven by AI, bought shares in enterprise software. The material notes that the PHLX Semiconductor Index, which rose by more than 80% over the past 2026 year, increased 6.3% on average over the quarter, while the Dow Jones Industrial Average gained 5.4% quarter-over-quarter, meaning the gap narrowed to about 12%.

At the same time, the Dow Jones Industrial Average ended the quarter at a record high of 52,900, with Apple’s growth at 5% partly supported by Bloomberg’s forecast for the upcoming launch of 10 million foldable iPhones. Over the three months, the index rose, according to data from the material, after investors increased their positions in the semiconductor sector.

The companies that gained the most were Micron Technology, up more than 10% on average. SanDisk, Applied Materials, and Lam Research rose 10%, while Intel and Marvell climbed about 9%. The material also notes that SK Hynix outperformed, driving growth in high-bandwidth memory, while ASML, KLA, and Applied Materials rose in the 5–6% range; meanwhile, the weakest point was that investors reduced positions in the chip-fabrication industry.

Rising expectations were also driven by macroeconomic uncertainty: the June nonfarm payrolls came in at 57,000, while the jobless claims were 110,000, and continuing claims for the week ending June 29 were 74,000. The market fell without breaking down to 4.2%, but at the same time, the labor force participation rate was 61.5%, the highest since 2021.

Given this macroeconomic backdrop, the material says that the key factor behind the rally in enterprise software was: the largest gains came from ServiceNow, Snowflake, and Palantir. It also notes that the iShares Expanded Tech-Software ETF grew by 35% over the same period. The material also points out that Snowflake’s net new customers grew by 36% of the total result, adding 616 net new customers, compared with 779 million-dollar accounts; while ServiceNow, Oracle, and Palantir’s results were in the 6–8% range.

Meanwhile, the material explains that the AI-related capital expenditures of hyperscalers will exceed $360 billion in 2025. The author suggests that investors are likely to focus on data-center infrastructure, while also considering power, memory, chips, and data centers as the main bottlenecks. The author also notes that the most likely areas of investment are not energy itself, but the infrastructure needed for AI buildout. Morgan Stanley Research predicts that through 2026, investments in AI-related infrastructure will increase due to the development of power, memory, chips, and data centers.

The material also says that the energy infrastructure outlook is a key factor in AI buildout, and that the investment needs will be driven by data-center power and memory. According to J.P. Morgan, AI skepticism is increasing as the risk of higher energy costs rises.

Meanwhile, the weak jobs report reinforced the view that the outlook would remain stable: Fed chairman Kevin Warsh said that the “steady” pace of inflation is expected to slow to 2%, and that forward guidance remains unchanged.

In the near term, based on the material, investors should focus on the results of Q2: the biggest sign of progress will be customer additions in the AI software layer, as measured by Snowflake; the conversion of the commercial pipeline in Palantir; and the AI attach rate in ServiceNow. Overall, the company’s progress is expected to be strong.

Tags: Economy/Energy/Technology/AI