Are Chip Stocks Poised to Stage a Recovery? Here’s What Wall Street Analysts Are Saying

Are Chip Stocks Poised to Stage a Recovery? Here’s What Wall Street Analysts Are Saying

Mon, August 3, 2026 at 11:06 PM GMT+3 2 min read

Key Takeaways

• Chip stocks have taken a hit in recent weeks. Several Wall Street analysts think they're poised for a rebound.

• Analysts pointed to signs of improving sentiment around the AI trade after better-than-expected earnings from Amazon and Microsoft.

Semiconductor stocks just had their toughest month in over a decade. Are they due for a rebound?

The PHLX Semiconductor Sector Index (SOX) in July logged its worst month since the 2008 financial crisis, leaving the index more than 20% off its June highs amid a broader pullback in the AI trade. Some investors, however, see the chance of a recovery: Better-than-expected earnings from major chip buyers Microsoft (MSFT) and Amazon (AMZN), which some on Wall Street saw as validating the cloud giants' AI spending, and a subsequent surge in chip stocks to end last week, could point to a shift in sentiment.

"Taken together, Microsoft and Amazon earnings results offer the most significant proof points to date that large scale bets on AI will generate tangible returns for customers and infrastructure providers," analysts at Jefferies wrote in a note Monday, telling clients they believe the negative sentiment surrounding the AI trade in recent weeks may have hit a bottom. Analysts at Citi, Bank of America, and UBS also suggested the big tech giants' results reinforced their conviction in chip stocks.

Shares of AI chip leader Nvidia (NVDA), which counts both Microsoft and Amazon among its customers, rose 3% Monday, adding to a 3% rise Friday in the wake of earnings from the cloud giants. Qualcomm (QCOM) and Intel (INTC) also advanced, sending the "SOX" index up about 1%.

Coming earnings could rekindle enthusiasm for the shares. Advanced Micro Devices (AMD), which saw its stock climb 2% Monday, is set to report earnings after the closing bell Tuesday with analysts expecting growing sales and profits on booming AI demand.

And SanDisk and Western Digital are due to release their results later this week.

Analysts at Morgan Stanley told clients in a note Monday that they expect "another strong set" of earnings from AMD, SanDisk, and Western Digital, which remain among the S&P 500's top performers for 2026 despite their recent slide. AMD shares have more than doubled in value this year so far, while Western Digital has tripled, and SanDisk has soared some 400%. Nvidia's stock has added 11% year-to-date, in line with the S&P 500.

Nvidia (NVDA) is scheduled to report later this month.

Read the original article on Investopedia