Semiconductor stocks extended their powerful 2025 rally on Monday as investors doubled down on the artificial‑intelligence (AI) build‑out, even while fresh data pointed to a worsening global shortage of memory chips and ongoing geopolitical pressure on the supply chain.
Market snapshot: chip stocks keep outrunning the broader market
The PHLX Semiconductor Index (SOX) climbed about 0.96% to 7,364.6 in Monday trading, hovering near record highs. [1]
Year to date, SOX is up roughly the mid‑40% range, according to data from Yahoo Finance and MarketWatch — more than twice the gain of many broad U.S. equity benchmarks. An easy way to see that strength is the Invesco PHLX Semiconductor ETF (SOXQ), which has delivered about 47% total return so far in 2025.
In afternoon U.S. trading on Monday:
- Nvidia (NVDA) traded near $184, up about 0.8% on the day.
- Broadcom (AVGO) gained roughly 2.6% to around $400.
- Advanced Micro Devices (AMD) added about 1%, changing hands near $220.
- Taiwan Semiconductor Manufacturing (TSM) was up around 1.7% near $300.
- Micron Technology (MU) jumped more than 3% to about $245 after a high‑profile analyst upgrade. [2]
- ON Semiconductor (ON) advanced roughly 2.5%, trading just above $56. [3]
The moves came as Wall Street positioned ahead of this week’s Federal Reserve meeting, with one widely read market note flagging semiconductors and AI leaders like Nvidia as key drivers of recent gains in the Nasdaq and S&P 500. [4]
AI remains the primary engine for semiconductor stocks
No theme looms larger over chip stocks than generative AI. Nvidia — now the world’s most valuable company and the first to cross the $5 trillion market‑cap mark in late October — sits at the center of that trade.
At the data‑center level, Nvidia CEO Jensen Huang has suggested that annual data‑center spending could approach $4 trillion by 2030 as companies re‑architect infrastructure for AI workloads. [5] That kind of number underpins the long‑term “AI supercycle” narrative powering both GPU suppliers and the broader chip ecosystem.
Wall Street still says “no AI bubble yet”
A fresh Bank of America note, spotlighted by Business Insider on Monday, argued that Amazon’s recent AWS re:Inventconference is another sign the AI build‑out is still in its early innings rather than peaking in a bubble. [6]
BofA highlighted five chip names it expects to benefit from Amazon’s latest AI push:
- Nvidia – the primary winner from AWS’s multi‑year partnership that will use Nvidia’s NVLink Fusioninterconnect to tie together AI accelerators.
- Astera Labs – a high‑speed connectivity specialist that BofA believes could still prosper despite concerns its technology might be displaced.
- Advanced Micro Devices (AMD) – a long‑standing AWS supplier that the bank expects to feature in large‑scale AI deployments.
- Marvell Technology – a key player in data‑center networking and connectivity.
- Credo Technology Group – a beneficiary of surging demand for high‑speed data‑center links. [7]
Separately, a Zacks screen of AI‑exposed semiconductor winners published Monday pointed to names like Nvidia, Silicon Labs, TSMC, Analog Devices and ASML, arguing that persistent AI enthusiasm is still driving broad‑based chip sales growth. [8]
Micron pops as memory supercycle meets global shortage
Memory stocks were in focus after Micron Technology received a dramatic target boost. Research firm Susquehannaraised its Micron price objective from $200 to $300 and reiterated a positive rating, following a strong quarter and upbeat guidance. [9]
MarketBeat’s summary of the call noted that:
- Micron’s latest quarter delivered $3.03 EPS on $11.32 billion in revenue, up 46% year over year.
- The company guided Q1 FY2026 EPS to a range of $3.60–$3.90, ahead of many expectations.
- Street consensus remains firmly bullish, with the stock carrying an overall “Buy” rating and an average target of about $225 despite Monday’s rally. [10]
Micron’s strength comes against a stark macro backdrop. A deep dive from Reuters last week described an “acute global shortage of memory chips” that is forcing AI giants and consumer‑electronics makers to fight for limited supply. Inventory levels at DRAM suppliers have fallen from 13–17 weeks in late 2024 to just 2–4 weeks this autumn, while prices in some memory segments have more than doubled since February.
South Korea’s SK Hynix has told analysts it expects the shortage to last through late 2027, and smartphone brands in China and Japan are already signaling they may have to raise device prices by 20–30% to cover soaring memory costs.
For investors, that combination — structurally tight supply plus AI‑driven demand for high‑bandwidth memory — is the backbone of the bullish case on Micron and its Asian peers.
ON Semiconductor and the EV/industrial power chip story
While AI‑centered GPUs steal most of the headlines, power semiconductors tied to electric vehicles and industrial automation are another major pillar of the chip rally.
A Monday filing showed French asset manager Ossiam increased its stake in ON Semiconductor by nearly 250%, buying 328,666 new shares and lifting its position to 460,201 shares, or about 0.11% of the company. [11]
MarketBeat notes that ON’s board has also authorized a $6 billion share‑repurchase program, theoretically allowing the company to buy back up to 32.7% of its outstanding shares — a sign management believes the stock remains undervalued despite its rebound. [12]
ON’s fundamentals are increasingly tied to structural trends in autos and industry:
- PwC forecasts that the automotive semiconductor segment will grow around 10.7% annually through 2030, driven by EVs, autonomous driving and software‑defined vehicles.
- Power devices based on silicon‑carbide (SiC) and gallium‑nitride (GaN) are expected to account for over 60% of automotive power semiconductors by 2030, up from roughly 23% today.
That trend is attracting fresh strategic alliances: for example, a new partnership announced today between Navitas Semiconductor and Cyient Semiconductors aims to accelerate GaN‑based power solutions, underscoring how EVs and fast chargers are reshaping the power‑chip landscape. [13]
TSMC and the foundry arms race
Foundry giant TSMC — the primary manufacturer of the world’s most advanced chips — also traded higher on Monday. Analysts quoted by Insider Monkey recently reiterated upside potential for TSMC, citing relentless AI demand and its dominant share of leading‑edge manufacturing. [14]
TSMC controls the bulk of global capacity at the most advanced process nodes used by Nvidia, Apple, AMD and others. Industry research from PwC and IDC suggests that:
- Server and network semiconductors — a category where TSMC’s advanced nodes are critical — should be the fastest‑growing end market through 2030, with an estimated 11–12% annual growth rate.
- IDC now expects the global semiconductor market to hit $1 trillion in revenue by 2028, two years earlier than previously forecast, largely because AI data‑center spending is accelerating.
That context helps explain why many strategists still view TSMC as a core long‑term holding for investors who want exposure to AI without betting solely on Nvidia.
Geopolitics: tariffs, export controls and the race to reshore fabs
The bullish demand story sits alongside growing geopolitical risk.
Export controls and China
In late August, the U.S. Commerce Department quietly allowed exemptions for Samsung, SK Hynix and Intel to lapse, meaning those companies must now obtain licenses to buy advanced U.S. chip‑making tools for their fabs in China. [15]
Separately, a U.S. congressional committee report in October found that Chinese chipmakers bought about $38 billion of semiconductor equipment from U.S.‑aligned suppliers since 2022, and urged broader bans on tool sales rather than targeted restrictions on individual Chinese firms. [16]
Both moves raise the risk of further disruption to global supply chains if Washington and Beijing escalate their tech rivalry.
Tariffs and industrial policy
On the tariff front, Reuters reported recently that a widely telegraphed U.S. semiconductor‑tariff package — expected to impose sweeping duties on Chinese chips and related products — is likely to be delayed into 2026, even as debate over “onshoring” intensifies. [17]
At the same time, government subsidies and corporate capex are exploding:
- PwC estimates that global semiconductor fab investments from 2024 to 2030 will exceed $1.5 trillion, matching the industry’s entire capex over the prior two decades.
- The U.S. CHIPS Act has catalyzed more than $630 billion in announced semiconductor supply‑chain projects across 28 states, including a $60 billion multi‑fab plan from Texas Instruments and over $100 billion in U.S. investments from Intel.
Those investments are intended to reduce dependence on East Asian fabrication hubs, but they also lock in years of elevated depreciation and operating costs — a long‑term consideration for chip‑stock valuations.
Sector outlook: trillion‑dollar market, multi‑year AI supercycle
Despite concerns about over‑exuberance, most industry forecasts still point to robust structural growth:
- PwC projects the global semiconductor market will grow from about $627 billion in 2024 to roughly $1.03 trillion by 2030, a compound annual growth rate of 8.6%.
- Enterprise AI spending should add roughly $1.7 trillion in platform and application investment by 2029, according to IDC, driving demand for high‑end compute, networking and high‑bandwidth memory.
- IDC has raised its 2028 semiconductor revenue outlook to $1.0 trillion, effectively pulling forward the industry’s “trillion‑dollar year” by two years versus earlier forecasts.
On Wall Street, that macro picture shows up in individual stock calls:
- Micron carries a Buy‑weighted consensus with several firms now modeling high‑20s to low‑30s percentage upside from current levels. [18]
- ON Semiconductor is rated a Hold overall, but with 14 “Buy” and 15 “Hold” ratings, and an average price target slightly above its recent trading range. [19]
- Multiple analyst lists of “top AI chips for 2026” prominently feature Nvidia, TSMC, AMD and memory makersas key long‑term beneficiaries. [20]
Risks: valuation, volatility and the memory crunch
The same forces that have pushed semiconductor stocks to the top of the global market‑cap league table also create meaningful downside risks:
- Stretch valuations
- Nvidia trades at a rich multiple relative to historic chip‑sector norms; recent analysis from MoneyWeek highlighted that the stock fetched over 50 times trailing earnings, with skeptics warning that any stumble in AI demand could trigger a sharp pullback.
- Supply‑chain fragility
- The global memory chip shortage is already being described by some analysts as a potential macroeconomic risk, with the possibility of delaying AI‑driven productivity gains and adding inflationary pressure as device makers raise prices.
- Policy and trade shocks
- Export‑control tightening and possible future tariffs on Chinese chips could disrupt both supply and demand, especially for companies heavily exposed to cross‑border manufacturing. [21]
- Market volatility
- A recent Barron’s piece noted that SOX shed roughly $500 billion in market value during the early‑November tech sell‑off, underscoring how quickly sentiment can swing even in a powerful bull market.
Bottom line
Semiconductor stocks head into the final weeks of 2025 with momentum, massive AI‑driven tailwinds and record‑high valuations. Monday’s action — a green day for most major chipmakers, a sharp move higher in Micron, and continued strength in AI‑linked names — fits the pattern that has defined the year: investors are willing to look past cyclical risks and policy noise as long as the AI infrastructure build‑out keeps accelerating.
At the same time, the memory crunch, geopolitical tension and rich multiples mean the sector is likely to remain volatile. For anyone following chip stocks, the key questions over the next year will be whether AI spending continues to scale as quickly as forecast, and whether manufacturers can expand capacity fast enough to avoid turning today’s shortage into tomorrow’s glut.
This article is for informational purposes only and does not constitute financial or investment advice.
References
1. indexes.nasdaqomx.com, 2. www.marketbeat.com, 3. www.marketbeat.com, 4. www.inkl.com, 5. www.nasdaq.com, 6. www.businessinsider.com, 7. www.businessinsider.com, 8. www.zacks.com, 9. www.marketbeat.com, 10. www.marketbeat.com, 11. www.marketbeat.com, 12. www.marketbeat.com, 13. finance.yahoo.com, 14. www.insidermonkey.com, 15. www.reuters.com, 16. www.reuters.com, 17. www.reuters.com, 18. www.marketbeat.com, 19. www.marketbeat.com, 20. www.zacks.com, 21. www.reuters.com
