By Jack Pitcher and Hannah Erin Lang
A year ago, investors had all but left Intel for dead. Now, the chip maker's shares are going parabolic, notching their first record in 26 years, then soaring past it.
Welcome to the great chip-stock melt-up of 2026. Intel is now up 239% this year. Sandisk shares have surged 558%. South Korea's largest stock index has nearly doubled. And the S&P 500's semiconductor companies have added roughly $3.8 trillion in market capitalization in the past six weeks alone.
The surge is thanks to AI companies' insatiable appetite for computing power, which has broadened to include all kinds of semiconductors such as memory chips and Intel CPUs. Chip makers just reported blowout profits, and issued rosy forecasts for the coming year.
Investors have piled in, including some who remember that the last time this happened -- back in the dot-com era -- the bubble eventually burst and many of the stocks never recovered.
Peter Feinberg, a 64-year-old retired lawyer in San Francisco, has invested in Broadcom and Taiwan Semiconductor Manufacturing Co. for more than a decade, helping his portfolio outperform the S&P 500 for the past several years. In 2026, the gains have become "a bit surreal."
"I'm familiar with the concept that the party is best about a half-hour before the police shut it down," he said.
For years, investors' enthusiasm focused on makers of specialized chips known as graphics processing units, essential for training and powering generative-AI models. Traditional CPUs became an afterthought. But the narrative on semiconductors started to shift around the new year, when Anthropic's latest AI model wowed customers with its agentic capabilities.
As the needs of AI companies have evolved, demand for traditional CPUs has increased, too. And agents can run 24/7 and generate copious data, increasing demand for memory. Shortages of all kinds of chips are now pushing prices higher.
"Now you have this land grab with the richest tech companies in the world buying all of the semis and compute they can get their hands on," said Jonathan Cofsky, portfolio manager of Janus Henderson's $8 billion technology and innovation fund. "And that's leading to banner profits for manufacturers."
The latest leg higher has been spurred by chip manufacturers' spectacular first-quarter results, and their even more impressive forecasts. The profits underpinning chip companies' stocks are a distinction from the dot-com bubble, when many of the biggest winners had little or no earnings.
Memory manufacturer Micron Technology, for example, is expected to increase revenue to $107 billion this fiscal year, up from $15.5 billion in 2023. The company posted an operating loss that year, in part because memory prices were low. Now, analysts forecast a full-year operating profit of $77 billion, as demand for the company's chips outstrips supply.
A 770% stock surge has made Micron one of America's most valuable companies. Yet its profits have increased so much that the stock actually looks cheap by traditional valuation metrics, with shares trading at 8.9 times the company's projected earnings over the next 12 months, according to FactSet, compared with the S&P 500's price-to-earnings ratio of 23 times.
"The anomaly right now is just how strong earnings growth has been," said Denise Chisholm, director of quantitative market strategy at Fidelity Investments.
Individual investors, too, want in on the action. At Interactive Brokers, the 10 most traded tickers on the platform of the past week consisted almost entirely of chip makers, the tech companies that purchase them, and one chip-focused exchange-traded fund: SOXL.
SOXL uses derivatives to produce triple the return of the NYSE semiconductor index each day, up or down. It is up some 1,200% in the past year, to the delight of thrill-seeking investors who have been posting screenshots of their gains on Reddit and X.
"AI is very much driving the bus as far as the market goes -- and to a greater extent the economy," said Steve Sosnick, chief strategist at Interactive Brokers. "Semis are the current manifestation of that... It's been about as vertical a move as I can remember."
Some analysts warn the similarities to the dot-com era are getting a little too stark to ignore. The PHLX Semiconductor index just notched its best six-week performance since the period ending March 10, 2000.
Chip manufacturers are rushing to build out capacity, but a number of bottlenecks have analysts projecting major shortages will last years, not months. Still, it's unlikely to last forever, and investors are wary of previous boom-bust cycles in semiconductors.
Some said the lack of long-term clarity is likely why valuations haven't climbed even higher, though they are rising by the day. Intel rose 14% Friday after The Wall Street Journal reported it had reached a preliminary chip-making agreement with Apple. Micron rose 15.5%.
"Remember, 'crazy' moves can go on for longer than most generally believe," Barclays analysts wrote to sales and trading clients on Wednesday.
Feinberg, the retired lawyer, said he is considering if and when to trim some of his chip holdings. But for now, he is holding on -- while trying to remind himself that the good times won't last forever.
"The most dangerous words for an investor are 'It's different this time, '" he said. "I think the market is pricey."
Write to Jack Pitcher at jack.pitcher@wsj.com and Hannah Erin Lang at hannaherin.lang@wsj.com
(END) Dow Jones Newswires
May 09, 2026 21:00 ET (01:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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