The second quarter has come to a close, and it was a series of major ups and downs for the biggest names in tech. Chip stocks, outside of Nvidia (NVDA), had a blowout six months on euphoria around memory and storage sales and the need for traditional processors to power the AI build-out.
Micron (MU) was the poster child for explosive growth in the first two quarters of the year, with shares rising an astonishing 308%. Intel (INTC), which is continuing its turnaround effort, rose a similarly impressive 280%, while AMD (AMD) rocketed 173% higher in the period.
Meta (META) and Microsoft (MSFT), meanwhile, were on the flip side, with Meta stock declining 15% and Microsoft fell 23% during the first half.
What’s the takeaway from all of this? Wall Street is still riding high on the AI build-out, but continues to question how software companies are monetizing their vast AI investments and how much longer they’ll keep pouring billions into the effort.
Amazon (AMZN), Google (GOOG, GOOGL), Meta, and Microsoft are expected to spend roughly $725 billion this year on capital expenditures, with the majority of that going to AI infrastructure.
The biggest beneficiaries of that? The hardware companies that provide the chips necessary to power AI data centers.
Look at Micron, for instance. In its latest quarter, it reported a 345% increase in revenue to $41.4 billion and earnings per share that blasted higher 1,214% to $25.11. And with the global memory shortage expected to last far longer, analysts are expecting a similar performance in the quarter ahead
Intel’s fundamentals aren’t as impressive as Micron’s, with Q1 revenue climbing just 11.9%. But the company’s stock performance is based more on reports that it has reached a deal to produce chips for Apple and is working to build AI processors for Nvidia.
High demand for central processing units (CPUs), has also helped boost the company’s stock. AMD is also riding the hope of future CPU sales expectations, as well as continued growth in its AI processor sales.
After climbing more than 800% since the launch of ChatGPT in late 2022, Nvidia stock has taken a breather compared to its cohort in the first half of the year improving 13% over the last 3 months and just 6% since the start of the year.
While hardware has generally performed well, Big Tech software stocks were more of a mixed bag. Amazon and Google posted gains of 13% and 12%, respectively, over the last three months, but Meta and Microsoft have spooked investors over their increased spending and questions about AI user growth.