AI chip stocks rebound after worst selloff in six years
Shares of major semiconductor companies surged on Friday, recovering from a historic sector-wide plunge. The rebound was fueled by supply constraints and renewed AI demand signals, though analysts warn of ongoing volatility.
AI chip stocks rebounded sharply on Friday following the sector's worst selloff in six years. The iShares Semiconductor ETF had plunged 12% on Thursday, setting the stage for a dramatic reversal in key names like AMD, Nvidia, and Intel.
Major chipmakers posted significant gains in the recovery. The moves came after a brutal session that saw the PHLX Semiconductor Index suffer its steepest decline since 2020.
| Company | Friday Gain | Thursday Drop | One-Month Decline |
|---|---|---|---|
| AMD | 9.61% | 17% | 33% |
| Nvidia | 4.43% | 9% | 21% |
| Intel | 6.90% | 10% | 51% |
| Micron Technology | 5.15% | Not Specified | 32% |
| Broadcom | 2.15% | Not Specified | 18% |
Supply constraints drive demand optimism
A fundamental mismatch between supply and demand provided a core rationale for the bounce. AMD CEO Lisa Su confirmed the dynamic on an earnings call, stating, "We do have more demand than we have supply." Her company's recent financials underscored the strength in artificial intelligence, with third-quarter revenue jumping 44.7% year-over-year to $13.38 billion, driven by a 97% surge in its Data Center segment.
Analysts pointed to additional catalysts. StoneX analyst Yi Fu Lee described the Thursday selloff as creating an "obvious reflex opportunity" for AI-exposed chip stocks. Regulatory comments from Texas Governor-elect Gina Hinojosa and news that AI firm Anthropic exceeded $80 billion in annual recurring revenue were also cited as positive factors working in the trade's favor.
Macro backdrop supports tech recovery
The broader market environment provided a tailwind for the sector's recovery. Major indices advanced, with the S&P 500 rising 0.97% and the Nasdaq climbing 1.70%. The CBOE Volatility Index, known as the VIX, fell 11.82%.
Strong economic data bolstered risk appetite. The U.S. economy added 165,000 jobs in October, far exceeding the forecast of 70,000. The unemployment rate fell to 4.1%. In other markets, the U.S. 10-year Treasury yield was 4.863%, crude oil traded at $90.35, gold at $4,057.80, and Bitcoin at $75,670.85.
Technical recovery after extreme volatility
The sharp rebound was characterized as a technical reaction to extreme moves. Stifel analyst Brian Chin called Friday's action a 'volatility whipsaw'. The prior session's damage was severe, contributing to the NASDAQ 100's worst day since April 2025. International markets felt similar pain, with South Korea's Kospi index falling more than 6% in its worst session since 2025.
Despite the powerful rally, caution persists. Analysts warned of further volatility ahead, citing persistent uncertainty around future data-center spending. The recovery also unfolds against a challenging backdrop for traditional computing. AMD's own planning assumption calls for PC market unit shipments to decline by a double-digit percentage in 2027.
