Artificial intelligence euphoria reached a new level this week as two semiconductor manufacturers reached $1 trillion in stock market value.
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Micron Technology surpassed the mark for the first time in its history on Tuesday as demand for chips that supply memory for AI soared. South Korean semiconductor maker SK Hynix also joined the $1 trillion club on Wednesday.
Their rise was rapid. Just 48 days ago, Micron reached a value of $500 billion. According to a Wall Street Journal analysis, the company reached the $1 trillion milestone faster than major companies such as Meta, Amazon, Nvidia, Walmart and Tesla. SK Hynix stock has soared more than 200% this year.
In a market driven by insatiable demand for artificial intelligence, reaching the once-rare $1 trillion mark is becoming more frequent. Since Apple first crossed the $1 trillion mark in 2018, 11 more US companies have followed suit. Earlier this month, Samsung, the world’s other largest memory supplier, also reached $1 trillion.
Wall Street analysts say more AI-driven market growth is likely in the future.
Goldman Sachs strategists predicted a 24% increase in profits this year, saying half of that would come from companies that are “beneficiaries of AI infrastructure investments.”
On Tuesday morning, UBS analysts added fuel to the fire, tripling Micron’s price target to $1,625 per share from $535. Micron stock quickly rose 19%, making Tuesday its fifth best day on record.
The stock continued to rise on Wednesday, rising another 2%.
Earnings also stimulate the market
Ed Yardeni, founder of Yardeni Research, said on May 3 that “increasing earnings revisions into 2026 and 2027” are also causing the market to soar.
Yardeni expects the S&P 500 index to rise from around 7,500 on Wednesday to 8,250 by the end of the year. His call is now the highest year-end goal among Wall Street analysts. Investment firm Oppenheimer also recently raised its goal to 8,100. Deutsche Bank, Morgan Stanley and Goldman Sachs also raised their year-end S&P targets to 8,000.
The S&P 500 index is already up nearly 10% this year, but would need to rise another 6% to reach the low end of these targets.
“Continued growth in earnings should fuel continued gains in the stock market,” Ben Snyder, chief U.S. equity strategist at Goldman Sachs, said in a note Tuesday night.
“Fundamentally, the strength of profitability has been the key differentiator between the recent sell-off and similar narrow rebounds in the past,” he added.
As earnings season winds down, S&P 500 companies have reported their best profit growth so far since 2021, according to FactSet Research data.
But again, the main drivers of profit growth were the largest technology companies. “In total, the ‘Magnificent 7’ companies reported earnings that beat expectations by 32.5%, compared to 16.6% for the S&P 500,” FactSet analyst John Butters wrote. The so-called Magnificent Seven includes Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla.
However, the coast is not completely transparent to the market.
Snyder warned that the outperformance of AI stocks also “raises the bar going forward,” while the energy shock from the ongoing Iran war “could create a situation of disappointing growth and tightening financial conditions that spell the end of the bull market.”
Another potential hurdle for stocks: The rally in bonds anticipates the Federal Reserve’s June 17 interest rate decision.
Futures traders now believe there is a 60% chance the Federal Reserve will have to raise interest rates by the end of the year, which could leave a dent in stock prices and corporate profits.
