Micron, SanDisk Lead Chip Stock Rally as SOX Re-enters Bull Market, Investor Confidence in AI Spending Rises

According to MarketWatch, chip stocks rose broadly on Monday (17th), as a series of recent developments reinforced investor belief in the sustainability of the artificial intelligence (AI) boom.

First, the Trump administration reportedly informed Apple (AAPL-US) not to purchase memory chips from Chinese companies. Memory chip supply constraints have already driven up prices. Apple stated in June that it might eventually have to pass some of these costs on to consumers.

Reports suggest Apple is currently testing chips from Chinese memory manufacturers ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC) to cope with supply shortages and rising prices. However, according to a Friday report by The Wall Street Journal, U.S. Commerce Secretary Howard Lutnick said, "The Trump administration does not support this move."

Micron Technology (MU-US) rose 4.1% on Monday. According to Dow Jones market data, Micron has now gained for five consecutive trading days, with a cumulative increase of 17.5%, marking its longest winning streak since January. SanDisk (SNDK-US) surged 8.9%. Other storage equipment manufacturers also rose, with Western Digital (WDC-US) up 5.4% and Seagate Technology (STX-US) up 2.2%.

The Philadelphia Semiconductor Index rose 1.6% on Monday, closing at 12,621 points, officially entering a new bull market. The index had previously been in a bear market for 21 days—the shortest bear market period since March 2020. Since the SOX entered bear territory on July 29, Credo Technology (CRDO-US) has been the top performer, rising 59.4% during that period.

Simon Friedman, market analyst at AvaTrade, said Apple’s potential shift to Chinese memory chips "is the only scenario in the next few years that could genuinely weaken U.S. suppliers’ pricing power." Therefore, he views the reported U.S. government intervention as "effectively removing a major long-term threat to Micron, SanDisk, and Western Digital."

He added that U.S. server makers like Dell Technologies (DELL-US) and Hewlett Packard Enterprise (HPE-US), if heavily reliant on Chinese supply chains, may face similar pressure to reduce dependence on Chinese products—potentially creating broader structural tailwinds for U.S. semiconductor-related firms.

On another front, a Bloomberg report revealed that AI startup Anthropic’s Q2 revenue grew over 14-fold year-on-year. This news further boosted investor optimism toward memory and storage equipment companies on Monday.

Jordan Klein, an analyst at Mizuho Securities, stated in a client note that the biggest recent catalyst for chip stocks has been "strong financial updates from advanced AI model companies like Anthropic and OpenAI." Both companies are currently racing toward IPOs.

According to reports, Anthropic’s Q2 revenue exceeded $11.5 billion, far surpassing $787 million in the same period last year.

Klein also pointed to another report. OpenAI’s CFO, Sarah Friar, told investors that the company’s enterprise revenue now exceeds consumer revenue. CNBC reported on Friday that OpenAI’s annualized revenue run rate has already reached $40 billion.

Klein noted that the current buy-side consensus expects Anthropic’s annual recurring revenue (ARR) this year to reach between $75 billion and $100 billion. Some reports even suggest that by the end of next year, Anthropic’s ARR could reach $180 billion to $200 billion.

If such scale is achieved, Klein believes it would mean the AI industry will require "massive" amounts of AI chips, memory components, networking equipment, and other data center hardware.

Although Anthropic still faces chip supply constraints and enterprise customer adoption of its technology has slowed, Klein emphasized that for investors, the most important factor is the accelerating revenue growth rate. "Investors need strong growth rates and financial signals showing that growth is not only accelerating but will continue to accelerate further—this is what sustains the bullish sentiment in the semiconductor industry."

AvaTrade’s Friedman noted that Monday’s strong chip stock performance occurred at a critical juncture. This follows SanDisk’s investor day last week, which left a strong impression on investors regarding the company’s financial targets.

Vivek Arya, analyst at Bank of America, said in a client report that SanDisk’s investor day "suggests the industry may be entering a more durable phase."

This differs from the typical "boom-bust" cycle historically seen in the memory industry. SanDisk expects 15% annual revenue growth and gross margins above 80% by the end of the century, supported by new customer agreements and supply strategies. Arya said these outlooks provide a reference framework for how investors should view memory stocks going forward.

Despite optimism about the chip sector’s outlook, Friedman cautioned, "I would remain cautious about chasing the rally now." The sector had previously dropped 30% to 40% in July. "Such extreme two-way volatility typically indicates that significant swings may continue in the future." Even though today’s rally is supported by solid news, it doesn’t mean the high volatility of chip stocks has disappeared.