Chip Stocks Surge 5.7% as AI Spending Fear Flips
Nvidia jumps 7%, AMD rebounds 8%, and Broadcom gains 6% as investors reframe hyperscaler capex plans as a semiconductor revenue bonanza.
Semiconductor stocks staged their best single-day rally in months on Friday, with the Philadelphia Semiconductor Index jumping 5.7% as Wall Street did an abrupt about-face on the AI spending narrative.
The same capex numbers that cratered tech stocks earlier in the week—Amazon's $200 billion plan, Alphabet's $175-185 billion forecast—suddenly looked like the demand signal chip investors had been waiting for. It's the same data. The interpretation just changed.
The Numbers
| Stock | Friday Gain | Week-to-Date Before Friday |
|---|---|---|
| Nvidia (NVDA) | +7% | Down sharply |
| AMD (AMD) | +8% | -17% on Wednesday |
| Broadcom (AVGO) | +6% | Sold off with sector |
| TSMC (TSM) | +4% | Down ~5% |
| ASML (ASML) | +4% | Down ~6% |
AMD's 8% bounce was particularly notable given it had plunged 17% earlier in the week on underwhelming Q1 guidance. The stock recovered nearly half of that loss in a single session as dip buyers piled in.
Why the Narrative Shifted
Two things happened Friday morning that flipped the script.
First, Nvidia CEO Jensen Huang went on CNBC and said demand for AI compute is "incredibly high." That's not new information exactly, but hearing it directly from the man running the dominant GPU supplier carries weight when sentiment is fragile. Huang's comments reminded the market that hyperscaler spending doesn't disappear into a void—it lands on Nvidia's top line.
Second, investors did the math. Alphabet's capex guidance of $175-185 billion is roughly double what it spent in 2025. Meta is projecting $115-135 billion. Amazon topped them all at $200 billion. Combined with Microsoft's previously announced plans, the big four hyperscalers are set to deploy somewhere north of $600 billion in 2026 alone. Roughly 60% of that goes to servers, which means GPUs, HBM memory, networking chips, and custom silicon.
That's not a headwind for semiconductor companies. It's the largest demand wave in the industry's history.
Google's Custom Chip Angle
Broadcom's 6% rally had a specific catalyst beyond general sentiment. Alphabet's spending isn't just going to Nvidia—a significant chunk funds Google's custom TPU chips, which Broadcom designs and manufactures. Google's cloud backlog surged 55% sequentially to $240 billion in Q4, and that demand increasingly runs on custom silicon.
For Broadcom, the AI custom chip business has become a growth engine that rivals anything in its portfolio. The company designs ASICs for three of the five largest cloud providers, and each new capex increase flows partially through its order book.
The Whiplash Problem
This week illustrated a dynamic that's becoming the norm in AI-adjacent trades: extreme sensitivity to narrative framing. On Wednesday, $200 billion in Amazon capex meant "profitability is dead." By Friday, it meant "chip demand is insatiable." The underlying facts didn't change. The story did.
For traders, this creates both opportunity and risk. The chip selloff earlier in the week gave short-term buyers a 5-8% swing trade in blue-chip semiconductor names. But it also means any future capex disappointment or demand signal could trigger an equally violent reversal.
What Matters Now
The earnings season is providing real data to anchor these debates. AMD's Q4 was a record quarter with $7.66 billion in revenue, even if guidance disappointed. TSMC's data center revenue continues to grow at double-digit rates. And Nvidia reports later this month—that'll be the definitive read on whether AI demand actually matches the spending commitments.
Until then, the semiconductor trade remains a conviction bet on the AI infrastructure buildout. Friday's rally suggests most of Wall Street still believes the money is real. But this week proved the market will test that belief at every opportunity. For more on how the broader tech sector is processing these moves, the debate is far from settled.