Semiconductor stocks are poised to conclude the year with their most substantial annual gains in over a decade, surging 66% in 2023, led by the chipmakers at the forefront of artificial intelligence (AI) applications.
The Philadelphia Stock Exchange Semiconductor Index is set to achieve its most significant one-year increase since 2009, mirroring a 70% rise following the financial crisis market bottom. Despite little change on the final trading day of the year, the index hovers near record levels.
Nvidia Corp. (NASDAQ:NVDA), the standout performer in the index, experienced explosive sales growth attributed to the high demand for chips powering AI computations. With shares more than tripling, Nvidia secured the distinction of becoming the first chipmaker to achieve a market capitalization exceeding $1 trillion.
Claiming the second position in the index’s gainers was Advanced Micro Devices Inc. (NASDAQ:AMD), a major player in the AI space. AMD’s stock soared by over 130% throughout the year, contributing to the overall success of semiconductor stocks.
Wolfspeed Inc., the outlier in this impressive performance, faced a decline of more than a third in its value for the year. The company, specializing in power modules for electric vehicles, grappled with production issues at a new plant, leading to two disappointing forecasts in 2023.
In addition to the index, ARM Holdings, a chip designer that went public in September, experienced a noteworthy journey. Despite initial market volatility, ARM Holdings has displayed strength, with a more than 60% increase since its October low.
The collective success of semiconductor stocks in 2023 underscores the industry’s resilience and growth, driven by the increasing prominence of AI applications and the notable performances of key players like Nvidia and AMD.
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