Signs of recovery in smartphone and computer demand have yet to provide the next tailwind for chip stocks as they languish below the heights of this year’s artificial intelligence rally.
Earnings reports from Intel Corp. and Samsung Electronics Co. were optimistic, indicating the worst may be over for electronics end-markets. Taiwan Semiconductor Manufacturing Co. was similarly positive on demand for traditional chips while also providing further evidence that the boom in cutting-edge AI tech will continue.
While chip stocks jumped on the back of Fed’s decision to leave rates unchanged and a plunge in US Treasury yields, overall the quarterly results have failed to spark sustained rallies in gauges of chip-related stocks. The Philadelphia Semiconductor Index is still up 30% this year after feverish AI-related buying, but that gain is roughly half of where it was at the summer peak.
Pundits cite fresh risks to global economies posed by potential expansion of the war in the Middle East along with ongoing concerns over the impact of elevated global interest rates and threat of recession. Tit-for-tat trade restrictions between the US and China provide extra uncertainty for the industry.
“As macroeconomic factors could shake up the markets, it has become tough for participants to muster up courage,” said Lee Seung-Woo, a Korea chip sector analyst at Eugene Investment & Securities. “Stock prices will move with high volatility between optimism and pessimism for a while.”
