The Philadelphia Semiconductor Index, known as the SOX (^SOX) by traders, is on a remarkable 16-day winning streak, marking the longest winning run in its 32-year history.
Deutsche Bank strategist Jim Reid pointed out that over the past 16 days, the index has surged an impressive 38.7%. The move has been underpinned by the index’s largest component, Nvidia (NVDA), which has risen 22.6% in that time. Nvidia is also the world’s largest company by market cap at $4.92 trillion.
What is the SOX? The Philadelphia Semiconductor Sector Index is a capitalization-weighted index composed of the 30 largest US companies involved in the design, distribution, manufacture, and sale of semiconductors.
It’s dominated by a few megacap names that serve as the foundation for the global artificial intelligence build-out. The four largest weightings in the index, from highest to lowest, are Nvidia, Broadcom (AVGO), Micron (MU), and AMD (AMD).
These four chip companies have seen their stocks surge in April. Memory chip player Micron has gained 52%, Broadcom is up 45%, AMD is up 55%, and Nvidia has tacked on 23%.
The fundamental backdrop: Besides pure momentum, the sector has recently gotten a jolt of good news. Taiwan Semiconductor Manufacturing Company (TSM) delivered a strong start to the year despite war-related uncertainty.
Taiwan Semiconductor’s first quarter revenue surged 35% year over year to a record 1.134 trillion New Taiwan dollars (about $35.6 billion). This represented the first time the foundry giant’s quarterly sales had crossed the trillion-dollar threshold in local currency. Results significantly surpassed the high end of its own previous guidance. Sales in March jumped 45% to roughly $13 billion, hinting that the AI supercycle is entering an even higher gear.
TSMC stock is up 22% in April.
All eyes are on Intel (INTC) now as it gets set to report earnings after the close of trading today. A good quarter and outlook will go a long way to reinforce the SOX melt-up.
The trend is likely to be your friend with semi stocks, until it isn’t.
Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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