Global chip stocks surge as blowout Micron results reignite AI rally

June 25 (Reuters) – Global chip stocks surged on Thursday after Micron Technology’s (MU.O), blockbuster ​results reignited the AI-driven rally, as investors grew more confident about persistent demand and tightening supply.

Micron, a key supplier for Nvidia’s (NVDA.O), AI ‌chipsets alongside South Korean chipmakers, surged more than 17% in U.S. premarket trading after it forecast quarterly profit and revenue well above expectations.

The company, whose shares have more than tripled in value so far this year, also said its customers had committed $22 billion to lock in supplies of memory chips, underscoring how AI-driven demand is tightening the market.

The stock was on ​track to add roughly $214 billion in market value at a price level of $1,237.91, taking its total market capitalization to $1.39 trillion. That puts Micron right behind Meta Platforms (META.O), ​and Tesla (TSLA.O), whose valuations stand at $1.41 trillion and $1.42 trillion, respectively.

Other U.S.-listed chip stocks also rose, with storage and memory peers Western Digital (WDC.O), and ⁠SanDisk (SNDK.O), jumping more than 10% each, while Seagate Technology (STX.O), rose 9%.

U.S.-listed shares of Arm Holdings (O9Ty.F), and Marvell (MRVL.O), gained between 4% and 6%, while Broadcom ​climbed around 2%. Nvidia (NVDA.O), the world’s most valuable company, rose 1.2%.

Qualcomm (QCOM.O), soared nearly 12% after the chip designer said it expects to generate $15 billion in sales from ​its data center business by 2029 as it moves beyond its core smartphone chips.

Global tech shares fell earlier this week, with U.S. chip stocks retreating from record highs as investors reassessed lofty AI-driven valuations and questioned how quickly heavy spending on data centre infrastructure would translate into profits.

Micron, a key supplier for Nvidia’s AI processors and the ​only U.S.-based producer of high bandwidth memory (HBM) chips, said demand continues to far outstrip supply, allowing it and rivals SK Hynix (000660.KS), and Samsung Electronics (005930.KS), to ​charge a premium.

Analysts at D.A. Davidson said Micron has entered “a new era” marked by unprecedented visibility and a memory cycle that “is far from over”. It bumped the stock’s price ‌target to ⁠a Wall Street high of $2,000, nearly double its last close of $1,048.51.

TECH STOCKS FROM SEOUL TO FRANKFURT RALLY

In Europe, Dutch chip-equipment maker ASML (ASML.AS), opens new tab, the region’s most valuable company, rose nearly 4% following two days of heavy losses triggered by investors taking profits after a record surge.

Infineon (IFXGn.DE), STMicroelectronics (STMPA.PA), and ASM International (ASMI.AS), rose between 3% and 6%, helping provide the main support for benchmark indices. Europe’s tech index (.SX8P), was the biggest sectoral gainer, up more than 2%, bringing year-to-date gains ​to 21.4%.

In Asia, South Korean chip ​heavyweights SK Hynix and Samsung Electronics closed ⁠higher at 13% and 5.3%, respectively.

“We expect tight conditions to persist beyond calendar 2027,” Micron CEO Sanjay Mehrotra said, pointing to strong demand and structural supply constraints.

J.P. Morgan analysts said the company’s shift toward multi-year customer ​agreements is “fundamentally transforming” its business model and underpinning a more durable earnings profile.

LITTLE SIGN OF DEMAND DESTRUCTION

J.P. Morgan ​said it saw little ⁠sign of demand destruction, adding that tight supply should persist and recommending investors “add on any dips”, while maintaining an overweight stance on South Korea.

“Memory shortages were triggered by the explosive need for AI factory infrastructure … and we believe the role of memory as a strategic asset in Artificial General Intelligence remains unchanged,” ⁠analysts at ​the U.S. bank said.

South Korea’s SK Hynix (000660.KS), also said on Wednesday it plans to raise up ​to $29.4 billion through a U.S. stock market listing, boosting investor expectations of a reduced valuation gap between the chipmaker and its smaller U.S. rival Micron.

($1 = 1,539.66 won)

Reporting by Heekyong Yang and Hyunjoo Jin in Seoul; Editing by Ed Davies, Amanda Cooper, Kevin Buckland and Devika Syamnath