AMD Jumps 8% as Chip Stocks Rebound From Worst Selloff in Six Years

AMD shares climbed 8% on Friday as chip stocks rebounded from their worst selloff in six years. Intel gained 6%, Micron Technology rose 4%, and Nvidia and Sandisk each added 2%. Broadcom finished up less than 1%.

Thursday's rout hit semiconductors far harder than the rest of tech. The iShares Semiconductor exchange-traded fund fell 12% on Thursday, while the iShares Expanded Tech-Software Sector ETF lost only 4%, StoneX analyst Yi Fu Lee told MarketWatch.

Why did chip stocks bounce back?

Lee called Thursday's move a "violent" selloff that created an "obvious reflex opportunity" among AI-exposed chip stocks on Friday. J. Gold Associates analyst Jack Gold agreed, telling MarketWatch the market staged a "big overreaction" to the Democrats sweeping the midterm elections, with many investors treating the result as the "end of the data-center buildouts" — a shift that would have a "drastic" effect on chip stocks.

"I think that the selloff was just too steep," Gold said, adding that buyers are stepping in while prices are low. He expects politicians in Ohio and New York could also moderate their stances on data-center development.

Mark Spindel, a partner at Pilot Wave Holdings, said Thursday's trading "compressed a lot of separate concerns into one trade, including AI capex, data-center policy risk, inflation and higher rates." Friday's rebound, in his reading, reflected the market "separating those issues again."

"Chip demand has not disappeared," Spindel said, though he warned that "near-term volatility" will persist as investors reassess the timeline of the AI buildout.

What changed on the regulatory front?

Texas Governor-elect Gina Hinojosa, who campaigned on a tougher approach to data-center regulation, delivered better-than-feared messaging after Thursday's close.

"I'm not ruling data centers out," Hinojosa said in a CNN interview on Thursday. "It's not that I hate data centers. We just need to stop what we are doing until we have protections for Texans."

Stifel analyst Brian Chin labeled Friday's action a "volatility whipsaw" reaction. The uncertainty around future data-center spending probably isn't going away, he said, and that could keep chip stocks volatile for some time. Still, Chin argued the "underlying appetite" for artificial intelligence hasn't changed since the midterms — the regulatory pathway has simply "become more tricky."

Can AI revenue survive a U.S. slowdown?

Lior Prosor, managing partner at venture-capital firm Deep33, said a temporary slowdown in the U.S. data-center buildout doesn't necessarily mean lower revenue for AI-exposed companies in coming quarters.

"Available capacity could simply serve demand elsewhere," Prosor said, noting that demand for computing power is global and that "big cloud companies are building around the world."

He also sees an opening in expectations. "We may be heading into the first earnings season in a long time with more cautious forecasts and expectations," he said, which means "room for some meaningful beats."

What about the AI demand signal?

The Wall Street Journal reported that Anthropic exceeded $80 billion in annual recurring revenue at the end of October, above where the metric stood at the end of September. The Journal also noted, however, that some Anthropic investors think the company's targeted IPO valuation needs to come down from $1.5 trillion.

Is the volatility over?

Probably not. Lee cautioned investors against making "irrational portfolio decisions" during a "violent tape." Chin's warning that data-center spending uncertainty could keep the sector choppy, paired with Anthropic's valuation debate, suggests Friday's bounce settles little — the next earnings season, with its lowered bar, will do more to test the AI trade than any single relief rally.