Dow rises 270 points as Micron, Qualcomm fuel AI-driven stock rally

US stocks opened higher on Thursday, led by gains in technology shares as strong earnings updates from Micron Technology and Qualcomm reignited optimism around artificial intelligence demand.

The Dow Jones Industrial Average was up 270 points or 0.52%. The S&P 500 and the Nasdaq Composite climbed 0.60%.

Micron surged 19% in trading after reporting fiscal third-quarter results that exceeded analyst expectations.

Qualcomm advanced 9.5% after raising its guidance for non-handset revenue in fiscal 2029.

Other semiconductor stocks also rallied in sympathy, including Sandisk, Western Digital, Lam Research, KLA, and Applied Materials.

European chip stocks also moved higher, with ASMI, Be Semiconductor, and Soitec posting sharp gains.

Micron and Qualcomm highlighted strong demand for AI infrastructure, with customers committing $22 billion to secure Micron’s memory chips, while Qualcomm forecast $15 billion in data center revenue by 2029.

The moves helped extend a tech-driven rally that had recently lost momentum, with investors reassessing valuations in the semiconductor sector.

Inflation data and economic signals shape sentiment

Market participants also digested the latest inflation and growth data, which broadly met expectations and added to the positive tone.

May’s personal consumption expenditures (PCE) price index showed headline inflation rising 0.4% month-on-month and 4.1% year-on-year, in line with forecasts.

Core PCE rose 0.3% on the month and 3.4% annually, also matching expectations.

Core inflation rose to its highest level since October 2023, but investors took some comfort that the reading was not higher given rising energy prices linked to the Middle East conflict.

A separate reading of first-quarter GDP showed the US economy grew 2.1%, compared with a prior estimate of 1.6%.

Treasury yields moved lower following the data, with the 10-year US Treasury note slipping more than 2 basis points to 4.374%.

The dollar index was little changed after gaining on Wednesday amid rising expectations of Federal Reserve rate hikes.

Tech rally resumes as investors reassess Fed outlook

Thursday’s gains followed a recent pullback in technology stocks driven by concerns over debt-funded AI spending and a potentially more hawkish Federal Reserve.

Despite recent volatility, semiconductor stocks remain strong performers.

Micron and Qualcomm have rallied over 200% and 50%, respectively, in the quarter. The Philadelphia Semiconductor Index is on track for its strongest quarter on record, according to LSEG data.

However, broader indices remain mixed in performance.

The Nasdaq is still on track for its biggest monthly decline since March 2025, while semiconductor shares are heading for their worst week since the start of the Middle East conflict earlier this year.

Traders are also watching comments from Federal Reserve officials, including Chair Kevin Warsh, as markets continue to price in the possibility of at least one rate hike by year-end.

Across global markets, Asia-Pacific equities closed mostly higher, led by sharp gains in South Korea and Japan, while European markets also opened in positive territory, supported by strength in chip stocks.