Semiconductor sector gains $200B as AI boom drives tech rally
What's the story
The global semiconductor industry has witnessed a massive surge in its market capitalization, adding over $200 billion in value. This comes as investors rush to invest in artificial intelligence (AI), further boosting tech stocks to record highs. The Philadelphia Stock Exchange Semiconductor Index and an Asia chip stock index have both contributed to this impressive growth, according to Bloomberg calculations.
Market leaders
Korean chip stocks soar, pushing Kospi index to record high
Korean chip stocks have emerged as major beneficiaries of this AI-driven market rally. The news of OpenAI's deal with a group of South Korean chipmakers has propelled their shares, pushing the Kospi Index to a record high. SK Hynix Inc.'s stock jumped 10% while Samsung Electronics' shares rose by an impressive 3.5%.
Investor sentiment
'Fear of missing out' drives tech momentum, says analyst
The current bull run in the tech sector is largely driven by a 'fear of missing out' among investors. Despite concerns about a potential bubble in the AI industry, they continue to invest heavily. Hebe Chen, an analyst at Vantage Markets in Melbourne, said "Tech momentum shows no sign of fading—as if gravity doesn't exist." She added that "It's FOMO that's clearly running the show."
Valuation surge
AI boom boosts chipmakers' valuations
The ongoing AI boom has significantly increased the valuations of chipmakers. Bloomberg's Asia chip index is currently trading at around 19 times forward earnings estimates, while the SOX Index is trading at 27 times earnings, approaching record highs. This reflects investors' growing confidence in the future profitability of companies involved in producing hardware for AI technologies.
Global expansion
OpenAI CEO to meet TSMC
OpenAI's Sam Altman plans to meet with Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Industry Co., after signing a non-binding framework agreement with Korean chipmakers. The shares of both companies rose on Thursday. Meanwhile, Chinese tech firms are also witnessing a strong surge, fueled by investor interest in the country's grassroots AI developments and government support for the sector.