Chip stocks jumped on Monday after reports that Washington pushed back on Apple sourcing memory chips from Chinese suppliers and after strong revenue updates from Anthropic and OpenAI. Micron, Sandisk, Western Digital and Seagate all gained, and the Philadelphia SE Semiconductor Index moved back into a bull market.
Apple's China chip plan meets resistance
Chip stocks rose on Monday as a flurry of reports boosted investor confidence in the sustainability of the artificial-intelligence boom. Apple has reportedly been testing memory chips from Chinese suppliers ChangXin Memory Technologies and Yangtze Memory Technologies to work around a supply crunch that has pushed prices higher, and the company said in June it would eventually have to pass some of those costs on to customers. But U.S. Commerce Secretary Howard Lutnick told the Wall Street Journal: "the Trump administration is not in favor of that", according to a Friday report. Neither Apple nor the White House immediately responded to requests for comment.
AvaTrade trading specialist Simon Friedman said the prospect of Apple turning to Chinese suppliers had been one of the biggest long-term risks to U.S. chipmakers' pricing power, so the reported pushback takes that threat off the table. He added that server makers reliant on China, including Dell Technologies and Hewlett Packard Enterprise, could face similar pressure to shift away from Chinese components, which could support U.S. chip names more broadly.
Memory and storage stocks rally
Micron Technology's stock rose 4.1% on Monday, extending a five-day run that marked its longest winning streak since January. Sandisk's stock climbed 8.9%, while Western Digital and Seagate Technology gained 5.4% and 2.2%, respectively. The PHLX Semiconductor Sector index rose 1.6% to close at 12,621, ending a bear-market stretch that lasted 21 days, its shortest since March 2020. Credo Technology Group was the best-performing stock in the group since the index entered that bear market on July 29, up 59.4% over the period.
Bank of America analyst Vivek Arya said Sandisk's investor day last week suggested the industry may be entering a more durable phase. Sandisk's outlook calls for 15% annual sales growth and gross margin above 80% through the end of the decade, which Arya said offers a framework for how investors may view memory stocks going forward.
AI revenue growth fuels the trade
A Bloomberg report also said Anthropic's revenue grew more than 14 times in the second quarter from a year earlier, reaching more than $11.5 billion compared with $787 million, which also drove optimism for memory and storage names. Mizuho trading-desk analyst Jordan Klein said bullish updates from Anthropic and OpenAI are the main near-term catalyst for chip stocks as the rivals push toward initial public offerings. He pointed to a separate report that OpenAI's annualized revenue run rate now stands at $40 billion, with Chief Financial Officer Sarah Friar telling investors enterprise revenue now exceeds consumer revenue.
Klein said buy-side consensus puts Anthropic's annual recurring revenue at $75 billion to $100 billion this year, with reports suggesting it could reach $180 billion to $200 billion by the end of next year. Still, Friedman said he would be cautious chasing the rally, noting chip stocks fell between 30% and 40% in July and tend to keep moving sharply in both directions.
Source: MarketWatch
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