Micron earnings test momentum of U.S. AI-driven chip rally

Traders Union
All News
Financial News
Micron earnings test AI rally

Highlights

Micron shares have surged 298% year-to-date ahead of June 24 earnings, seen as a key test for ongoing AI-driven semiconductor sector gains.
The S&P 500 is up nearly 1% this week, driven by AI-related corporate earnings and Apple’s new chip partnership with Intel to boost domestic manufacturing.
Big Tech’s AI infrastructure outlays are expected to exceed $700 billion in 2024, but second-quarter S&P 500 earnings growth forecast slows to 22.9% from 29.3% in Q1.

Micron results in focus next week

As reported by Reuters, Micron's quarterly earnings due on Wednesday, June 24, are seen by investors as a key gauge of whether spending on data centers and AI infrastructure continues to drive upside across the semiconductor sector.

Micron shares are up 298% this year, while the Philadelphia SE Semiconductor index reaches a record high and is last up 7% for the week. Market participants are watching whether the memory chip maker can reinforce expectations that profits linked to AI investment still have room to expand.

Andy Pratt, director of investment strategy at Burney Company, says recent momentum in the theme remains strong, while Steve Kolano, chief investment officer at Integrated Partners, describes Micron's report as a potential positive feedback loop for the broader trade. Kolano says chip industry backlogs and demand remain far above available capacity, supporting the case for continued strength.

AI trade supports market, but macro risks remain

The S&P 500 is nearly 1% higher so far this week and is on pace for a second weekly gain, helped by corporate earnings tied to the AI boom and easing concern from the Iran war. Apple also agrees to partner with Intel to design and manufacture chips in the U.S., a move that could aid Intel's turnaround efforts.

Big Tech signals that AI spending is not slowing, with outlays set to rise past $700 billion this year from $400 billion in 2025. The consensus view in the market is that the AI trade remains intact, and newly public SpaceX, along with Nasdaq's inclusion of AI and chip infrastructure names such as Astera Labs and CoreWeave, adds to that momentum by forcing index funds to buy the shares.

Still, investors are also monitoring underlying economic risks. The Federal Reserve's preferred inflation measure and a final reading on first-quarter GDP are both due next week, while second-quarter S&P 500 earnings growth is estimated at 22.9%, down from 29.3% in the first quarter, according to data provided by Tajinder Dhillon, head of earnings research at LSEG. Drew Matus, chief market strategist at MetLife Investment Management, says any disruption to the AI trade or the rise in stocks could also weaken the wealth effect that has supported U.S. consumers.

In our earlier article on Arm Holdings (ARM) stock, we highlighted how the company’s latest earnings and AI-linked licensing and data-center royalties were reinforcing bullish investor sentiment. We also noted that ARM was trading above key technical levels, with consolidation seen as likely but upside favored as long as major support held—keeping the focus on whether AI-related demand can continue to power semiconductor leaders higher.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.