Chip Stocks Surge 780% as AI Boom Shifts from Software to Hardware

Investors are abandoning big tech companies and pouring money into chip makers, driving some stock prices up by nearly 800% in just six months. The shift marks a major change in the artificial intelligence (AI) boom. While software giants like Microsoft and Meta have seen their stocks fall, companies that make the physical chips powering AI data centers are seeing record gains. In Asia, South Korea's Kospi index rose 123% in the first half of this year—its best performance since at least 1990. The jump was led by electronics giant Samsung, whose stock climbed 169%, and chip maker SK Hynix, which surged 303%. Both companies report a huge increase in demand as AI firms compete for the chips needed to run their systems. On Monday, South Korean President Lee Jae Myung pledged more than 455 billion euros for semiconductors, AI data centers, and robotics over several years. Under the plan, Samsung and SK Hynix will build four new factories in the country's southwest. US chip makers are also booming. SanDisk shares rose 780% in 2026 and 4,510% over the past 12 months. Western Digital gained 240%, Micron rose 296%, and Seagate advanced 226%. "These four companies have generated the kind of gains in six months that you would normally expect over decades of investment," said Dan Coatsworth, director of markets at investment platform AJ Bell. "Demand that exceeds limited supply caused memory chip prices to rise and sent supplier stocks on a spectacular rally." The demand is so strong that Apple last week blamed higher memory chip costs for price increases on its iPads and MacBooks. Apple is also reportedly seeking permission from the Trump administration to buy chips from Chinese company CXMT, which is on a Pentagon blacklist. Meanwhile, "hyperscalers"—companies that run the largest data centers and deploy AI services—have seen their stocks fall. Microsoft is down 24% in 2026 and hit a one-year low last week. Meta has dropped 15%. Some investors are worried about the massive spending plans these companies have announced, which increase debt and use up cash flow. But there are signs the chip rally may be slowing. Some stocks have fallen from recent highs as investors move money to other sectors. "After piling into AI and tech since late March, there is a desire to protect gains, and investors are in a 'sell first, ask questions later' mode," said Chris Beauchamp, chief market analyst at trading platform IG. Despite this, global markets have had a strong first half of 2026. Japan's Nikkei rose 38%. The UK's FTSE 100 gained 5.8%, though it fell from a record high in February due to the Iran war's impact on stocks. Brent crude oil started the year at $60 a barrel and ended June around $12 higher. In late April, prices briefly doubled to over $120 as the closure of the Strait of Hormuz worsened supply shortages. The US S&P 500 index gained 7.4% this year, closing last week at 7,354 points. Mark Haefele, chief investment officer at UBS Global Wealth Management, predicts the index will rise to 8,200 points by June 2027. "Our base case expects continued strength in AI capital spending, a resilient US economy, ongoing fiscal spending worldwide, and solid credit creation that will keep supporting corporate profit growth and markets in general," he said.