Wall Street stocks point higher as AI chip rally lifts Micron and software names face pressure

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AI chip rally lifts Wall Street

Highlights

Micron surges another 7% premarket, extending a 19% rally and surpassing $1 trillion in market cap as AI-related chip demand intensifies.
Zscaler drops nearly 25% after issuing weak guidance, with selling pressure spilling into peers Palo Alto Networks, CrowdStrike, and ServiceNow following executive departures.
JPMorgan upgrades FedEx to buy with a $460 price target before its freight unit separation, while Citi reinstates Danaher at buy with a $230 target amid improving bioprocessing outlook.

Premarket drivers and sector calls

As reported by CNBC, Wall Street is heading for another positive session, while oil prices are falling after Iranian state TV says it has received a draft framework for a peace deal with the U.S. Market momentum is also being driven by AI-linked semiconductor shares, with Micron adding to a sharp rally in premarket trading after surging 19% and moving above a $1 trillion market capitalization.

Micron rises another 7% before the bell, supported by tight share availability, index-fund demand and strong appetite for memory chips used in AI systems. The report also notes that South Korea's SK Hynix has crossed the $1 trillion valuation mark in local trading, underscoring how investor demand is concentrating around memory suppliers tied to AI infrastructure.

Outside semiconductors, software stocks are under pressure after Zscaler issues softer guidance for its current fourth quarter and next fiscal year, sending the shares down nearly 25% in early trading indications. The weakness is seen spilling over to peers including Palo Alto Networks and CrowdStrike, while ServiceNow also draws attention after its chief marketing officer leaves to join OpenAI as chief marketing officer for business.

Broker actions highlight diverging views across sectors

Analyst calls on Wednesday show a split between caution on some software names and renewed support for selected technology and industrial stocks. Bank of America starts ServiceNow with a buy rating last week and now reinstates Intuit with a buy, arguing the company's valuation does not fully reflect the quality of its businesses and that AI is more likely to be a tailwind than a headwind.

In transport, JPMorgan upgrades FedEx to buy from hold and raises its price target to $460 from $432, citing an attractive risk-reward profile ahead of next week's separation of the freight unit and improving trends in the legacy parcel business. Citi also reinstates Danaher with a buy rating and a $230 price target, pointing to improving prospects in bioprocessing, while Baird says AutoZone's recent sell-off has returned the stock to more attractive levels even after trimming its target price to $3,600 from $3,900.

The mix of upgrades and downgrades reflects a market that is still rewarding companies tied to AI capacity and operational turnarounds, while punishing businesses facing slower growth or strategic uncertainty. That leaves chipmakers and selected industrial names in favor, even as parts of enterprise software remain under closer scrutiny.

In our earlier coverage of premarket trading, we highlighted sharp sector splits as guidance and analyst calls drove big moves. Zscaler’s softer outlook weighed on cybersecurity peers, while AI-linked semiconductors—particularly Micron—extended gains as the chipmaker pushed past a $1 trillion market capitalization, underscoring how investor interest was concentrating around the AI supply chain.

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