Micron and Qualcomm forecasts add $400 billion to chip stocks, quieting AI doubters
After a two-day selloff, Micron Technology and Qualcomm delivered blowout forecasts that added over $400 billion in market value to semiconductor stocks, reviving the AI trade.
The forecasts
Micron Technology reported fiscal third-quarter revenue of $41.45 billion, quadrupling from a year earlier, and forecast fourth-quarter revenue of $50 billion, plus or minus $1 billion. That blew past the $43.58 billion average analyst estimate. Qualcomm, meanwhile, said it expects $15 billion in sales from its data center business by 2029, signaling a shift beyond smartphones into AI infrastructure.
Market reaction
The combined outlooks added over $400 billion in market value to chip stocks in extended trading. Micron shares surged 12%, while Western Digital, Sandisk, and Seagate each jumped more than 8%. Arm Holdings rose 6%, Marvell added 4%, and Broadcom climbed 2%. Equipment makers Applied Materials and ASML both gained over 4%. The rally followed an 8% tumble in the PHLX chip index on Tuesday, which had been driven by concerns that AI valuations were stretched.
- PHLX chip index tumbles 8% amid AI valuation concerns
- Micron reports Q3 earnings, forecasts Q4 revenue of $50 billion
- Qualcomm announces $15 billion data center sales target by 2029
- Chip stocks surge in extended trading, adding $400 billion in value
- Asian markets open higher, led by tech gains
Supply constraints
Micron CEO Sanjay Mehrotra said tight supply conditions would persist beyond 2027, with no line of sight on when memory supply will catch up with demand.
The company, the only U.S.-based manufacturer of high-end memory chips, has seen demand for its HBM chips far outstrip production capacity. Analysts expect the supply-demand gap to last two to three years.Even as we expect industry supply to improve gradually in 2028, we currently do not have line of sight as to when memory supply will be able to catch up with increasing demand.
Anthropic deal
The strong results came the same week Micron signed a deal to supply AI lab Anthropic with memory and storage chips. Micron also disclosed it participated in Anthropic's Series H funding round, though it did not reveal the amount invested. The partnership underscores how chipmakers are deepening ties with AI developers as demand for compute infrastructure grows.
Market swings
The chip sector had whipsawed earlier in the week. The PHLX chip index tumbled 8% on Tuesday, and the Nasdaq fell more than 5% from its record high. Investors had grown nervous about stretched valuations and the timeline for AI data center investments to generate returns.
Micron's report reversed that sentiment, with Nasdaq 100 futures soaring over 2% in early Asian trading.Part of the move in tech reflects funds taking profits and recognising that the risk-reward profile has shifted, particularly given the crowded positioning across parts of the global AI infrastructure and memory complex.
Broader context
The forecasts quieted, at least temporarily, doubts about whether massive AI infrastructure spending would pay off. Big Tech firms are expected to spend more than $700 billion on AI infrastructure, and Micron's results suggest that memory chip demand remains robust. Apple CEO Tim Cook warned last week that memory chip price increases are unavoidable for consumers.
Even after this week's volatility, the PHLX chip index remains up 90% in 2026, and Micron has gained over 260% year to date.Price increases for our products are unavoidable.
