By Jared Mitovich
The massive gains in chip manufacturers from South Korea to Silicon Valley have hit a volatile stretch.
Chip makers, including Intel, Micron and AMD, closed Monday on their worst two-session skid since March, an abrupt halt to a torrid weekslong rally. Yet they were back on the rise Wednesday, and Wall Street expects first-quarter results from market behemoth Nvidia, due after the close, to help determine stocks' path forward.
Investors' enthusiasm for the makers of the tiny devices powering AI has helped pull the stock market out of its Iran war malaise, carrying indexes in South Korea and Taiwan past their Western peers and fueling the blockbuster public offering of chip startup Cerebras.
Here's a look at where things stand:
Investors welcomed successive blockbuster earnings reports from companies such as Apple, Google and Amazon by piling into the stocks of the manufacturers that supply their AI chips. The PHLX semiconductor index, which tracks a basket of chip makers, rose 38% in April to its best monthly performance so far this century. The index has lost some of that momentum in May, briefly sliding 6.4% in a two-day span but still leaving stock valuations hovering at historically high levels.
In advance of Nvidia's earnings, investors didn't have much else to parse, turning a breakneck rally into more of a holding pattern, said Gina Martin Adams, chief market strategist at HB Wealth.
"Is it a concern that we had such a rapid acceleration over the last six weeks? Absolutely," she said. "This rationalization of pricing we've started to experience in the last few days is a very healthy condition."
The wave of chip enthusiasm lifted a comparatively nascent company to a big-time debut in public markets. Cerebras, which makes monster-size AI chips, completed a monster IPO on May 14, when its shares soared 68% in their first day of trading.
Shares of Cerebras fell in their second trading day, but have remained higher than the initial offering price, despite wavering analyst confidence that the startup has a place in the AI ecosystem.
Chip makers have come to total roughly 19% of the market capitalization of the S&P 500 index -- their highest share on record, according to an analysis by Goldman Sachs. In South Korea, tech giants SK Hynix and Samsung have grown to comprise nearly half of the entire Kospi index, even as the benchmark has slid roughly 9% from its all-time high on May 14.
The dominance of the semiconductor business in global markets isn't such a good thing, some analysts say. Around three-quarters of fund managers surveyed by Bank of America in May said that "long global semiconductors" is the most crowded trade in markets currently.
The market's heavy concentration in a small number of stocks is the biggest difference between the dot-com bubble and today's AI boom, Adams said. In the six-month period after its value peaked in 2000, the semiconductor index receded more than 25%, while Intel and AMD lost more than half of their share price.
"The dot-com bubble wasn't about us putting all our eggs in one basket. It was about us saying we love all stocks, especially tech stocks," she said. Now, "we effectively are putting all of our eggs in one basket, and that basket is called AI or innovation."
Nvidia, the dominant player in the AI chip market, has underperformed fellow heavyweights and nascent alternatives alike this year.
Nvidia's stock has slid three days in a row ahead of its first-quarter earnings report on Wednesday. It is still up 18% this year, keeping the company at the very top of financial markets, with a market capitalization of $5.34 trillion.
Write to Jared Mitovich at jared.mitovich@wsj.com
(END) Dow Jones Newswires
May 20, 2026 12:25 ET (16:25 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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