Chip stocks rally to start 2026 after third-straight winning year

The new trading year of 2026 has kicked off with a remarkable rally in chipmaking stocks, as investors flock to this booming sector driven by advancements in artificial intelligence. Leading the charge, Dutch chip equipment manufacturer ASML saw a significant increase of 9%, while Micron Technology experienced an impressive 8% jump. Other notable gains included Lam Research and Intel, which both rose approximately 7%, alongside Marvell Technology, which climbed 5%. Advanced Micro Devices (AMD) and Nvidia also contributed to the momentum, with gains of about 3% and 2%, respectively. In the previous year, AMD had a staggering 77% increase, while Nvidia enjoyed a 39% rise, showcasing the robust growth in the industry. The surge in chip stocks is largely attributed to the thriving market for AI, as major players like Amazon and Google heavily invest to meet the relentless demand for data centers. This marks the third consecutive year of growth for the semiconductor sector, despite ongoing concerns regarding AI valuations and the sustainability of such rapid increases. Recent months have seen rising apprehensions about a potential AI bubble, especially after prominent investor Michael Burry, known for his role in 'The Big Short,' disclosed his short positions on Nvidia and Palantir. Burry has been vocal about his concerns regarding hyperscalers inflating earnings. The upswing in chipmaking shares has also propelled the VanEck Semiconductor ETF to a 4% increase, building on a remarkable 49% rally in 2025. This ETF has now enjoyed three consecutive years of growth, recording its best performance in 2023 with a remarkable 72% gain.