Anticipation of an Iran peace deal and geopolitical competition in AI have jointly driven the semiconductor sector to break out of a correction and set a new all-time closing high.
On Monday, a robust return of global risk appetite, fueled by two key factors, saw chip stocks leading gains in the U.S. market.
The signing of a preliminary U.S.-Iran peace agreement boosted overall market sentiment, while U.S. export controls on a new model from Anthropic sparked strong expectations that other nations will accelerate building their own AI infrastructure, potentially benefiting global chip demand.
The Philadelphia Semiconductor Index surged 5.45% on Monday, not only exiting a technical correction but also achieving a record closing high.
NVIDIA (NVDA), Broadcom, and Intel each rose more than 2.5%, Qualcomm gained over 4%, and Marvell Technology soared more than 10%.
The memory sector also experienced a strong rally, with Micron Technology and Seagate Technology climbing over 10% and 9% respectively, while Western Digital (WDC) surged more than 16%, leading the S&P 500 index.
Resurgent Risk Appetite Lays the Foundation
The first catalyst for this rally came from a significant positive turn in Middle East tensions.
According to reports, the U.S. President stated on social media that with the U.S.-Iran agreement signed on Friday, June 19th, the Strait of Hormuz would reopen for mine-clearing operations. An Iranian deputy foreign minister also indicated that an immediate and permanent cessation of military actions on multiple fronts, including in Lebanon, would be announced starting that evening.
U.S. officials confirmed that the Iranian parliament speaker, representing the Iranian side, signed the agreement. This individual is seen as a hardliner within the Supreme Leader's camp, giving his endorsement significant political weight. Details of the memorandum are expected to be released within 24 to 48 hours.
Stimulated by this news, safe-haven sentiment rapidly dissipated, with capital flowing into high-beta risk assets. The Nasdaq Composite significantly outperformed other major indices, with the technology, media, and telecom (TMT) sector leading gains, while energy and defensive sectors lagged.
The founder and portfolio manager of Rainwater Equity ETF stated that it was clear the market viewed the Iran deal as risk-reducing, and Monday's action represented a broader risk asset rally.
However, analysts cautioned that the peace process contains many variables.
A senior U.S. official reportedly stated that shipping traffic through the Strait would increase gradually, with a significant ramp-up potentially taking up to two weeks, and a return to pre-conflict levels requiring even longer.
The official also noted that mines still needed clearing from the Strait and that shipping companies had varying risk tolerances. An analyst from Deutsche Bank noted in a report that while the deal was very good news for markets, difficult negotiations over the next 60 days would be needed to ensure sustainable peace.
The analyst also specifically pointed out that the agreement still required U.S. Senate approval for sanctions relief on Iran.
Anthropic Export Controls Ignite AI Arms Race Expectations
The second major driver stemmed from geopolitical maneuvering in the AI sector.
Reports indicate that two of Anthropic's top AI models were placed under export controls by the U.S. Commerce Department, restricting access for foreign entities and individuals, citing jailbreak security risks.
This move quickly sparked market speculation about intensifying global competition for AI sovereignty.
An analyst from D.A. Davidson suggested that if other countries decide to increase investment in AI infrastructure, "which could include building their own equipment, their own data centers, and funding the development of their own frontier models," it would bring significant international and government-side business for chip companies.
The CEO of Box stated in a post that the U.S. government's decision set a precedent that AI models could indeed be forced offline.
He argued that this risk, a theoretical possibility two days prior, was now a reality, which would likely prompt more countries to accelerate the independent development of their own artificial intelligence.
He also warned that as other nations shift towards pursuing open-weight models, which are "currently generally not from the U.S.," American leadership in AI could erode over time.
However, an analyst from Mizuho held a more reserved view, suggesting the dispute between the U.S. government and Anthropic was merely "noise" and had "no real impact at all" on the "overall big picture narrative for chips" or AI spending.
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