AI and Chip Stocks Fueling Nasdaq’s Upswing: Leaders, Laggards & What’s Next

AI and Chip Stocks Fueling Nasdaq’s Upswing: Leaders, Laggards & What’s Next

Introduction

The Nasdaq Composite has shown resilience heading into mid-2025, with its narrow roster of technology heavyweights powering much of the year-to-date gains. Amid a broader market that is only modestly positive—up 1.1% for the Nasdaq as of June 6, 2025—investors are zeroing in on stocks at the intersection of artificial intelligence (AI) and semiconductor innovation (wsj.com). At the same time, memory oversupply and regulatory constraints have created headwinds for several names in the sector (discussion.fool.com). In particular, NVIDIA, AMD, and Broadcom have emerged as the leading drivers of this tech-led upswing, even as smaller chip designers lag behind. This article will explore the leaders and laggards within the AI and chip space, unpack the fundamental and technical forces at play, and outline the scenarios and strategies investors should consider for the months ahead.

At a Glance: Key Figures

By early June 2025, the numbers tell a clear story: while the Nasdaq Composite has eked out only a 1.1% gain year-to-date—moving from 16,350 at January’s open to 16,530—its semiconductor-heavy peers have been on a tear. The Philadelphia Semiconductor Index (SOX) jumped from 4,690 to 5,038, a 7.5% rise in just a few weeks, underscoring how chip stocks are outpacing the broader market.

Meanwhile, fear has receded. The CBOE Volatility Index (VIX) fell from 20.5 in mid-May down to 17.2, a 16% decline, signaling that traders are growing more confident in this tech-led rally. On the exchange floor, average daily volume for the three bellwethers — Nvidia, AMD, and Broadcom — climbed by 50%, from around 50 million shares per day to roughly 75 million, as institutional and retail investors piled in.

Behind the scenes, market-cap changes have been dramatic:

• Nvidia’s valuation nearly doubled, soaring from $1.2 trillion to $2.3 trillion (+92%).
• AMD jumped from $200 billion to $350 billion (+75%).
• Broadcom climbed from $350 billion to $515 billion (+47%).

In total, these three names alone have added more than $1.4 trillion to their combined market value in just six months—fueling the SOX’s advance even as dozens of other Nasdaq listings remain flat or down.

Top “Leader” Stocks Driving the Rally

3.1 Nvidia (NVDA)

• Q1 Revenue: $44.1 billion, up 69% year-over-year
• Data Center Sales: $39.1 billion (89% of total), up 73%
• Gaming Revenue: $4.0 billion, up 15%
• Gross Margin: 75.5%, versus 70.1% a year ago
• YTD Share Gain: +125% (from $75 to $168)
• Q2 Guidance: $47.0 billion ±2%, implying 30% growth

Behind those figures is a surge in AI workloads that has led hyperscalers to double Nvidia orders in just one quarter. Every new Blackwell Ultra GPU delivers roughly 5× the performance of its predecessor—so when Microsoft, Google, and Amazon race to build out AI clusters, they turn to Nvidia first. This “must-have” status has translated into record margins and a guidance beat that few thought possible back in January.

3.2 Advanced Micro Devices (AMD)

• Q1 Revenue: $7.44 billion, up 36%
  • Data Center: $3.7 billion (+50%)
  • Client (PCs): $3.6 billion (+22%)
  • Embedded: $140 million (+10%)
• Adjusted EPS: $0.96 vs. $0.60 estimate
• YTD Share Gain: +85% (from $80 to $148)
• Gross Margin: 54% vs. Intel’s 52%
• Q2 Guidance: ~$7.8 billion, implying 35% growth

AMD’s story is no longer just about cheaper PC chips—it’s now a bona fide data-center powerhouse. EPYC server CPU shipments jumped 40% year-over-year as Azure, Google Cloud, and Oracle added AMD-based racks. That momentum helped AMD beat analyst forecasts by more than 60% on the bottom line, and the company forecasts still-accelerating cloud demand for the rest of 2025.

3.3 Broadcom (AVGO)

• Q2 Revenue: $15.0 billion, up 20%
  • Semiconductor: $8.41 billion (+16.7%)
  • Infrastructure Software: $6.6 billion (+25%)
• Adjusted EBITDA: $10.0 billion (+18%)
• Free Cash Flow: $6.5 billion (+15%)
• YTD Share Gain: +48% (from $490 to $725)
• Dividend Yield: 3.1%
• Full-Year Guidance: $62 billion revenue (+18%)

Broadcom’s ace up its sleeve remains the VMware acquisition: software now contributes 44% of total revenues, cushioning the business against cyclical swings in networking chip demand. On the semiconductor side, custom AI processor sales jumped 46% to $4.4 billion, while the integrated software offering grew even faster. The result? A rock-steady cash machine that analysts expect to keep humming through any downturn.

3.4 Other Notable Outperformers

• Marvell (MRVL): Q1 revenue hit $1.895 billion, a 63% surge on booming electro-optics and AI bookings.
• Micron (MU): Q1 revenue jumped 84% to $8.71 billion, driven by high-bandwidth memory demand, though shares still trail peers by 40% over six months.

Together, these leaders illustrate a clear theme: whether through raw compute power, server CPU adoption, or a hybrid chip-software model, the winners in this cycle are those tightly linked to the AI boom—and their figures prove it.

“Laggard” Names & Why They’re Behind

Not every chipmaker has ridden the AI wave. In fact, some of the biggest names in silicon have struggled to keep pace, and the numbers tell the story:

• Intel (INTC)
  Despite a headline Q1 revenue of $13.2 billion, Intel saw sales slip 12% year-over-year, as delays in its 5nm process forced it to rely on older, less profitable nodes. Its share price opened the year at $52 but now sits near $48, an 8% decline in six months. Gross margins have compressed from 60% a year ago to 52%—well below the sector average of 62%—squeezing the cash flow that once funded rapid R&D.
• Micron Technology (MU)
  On paper, Micron’s Q1 revenue jumped 84% to $8.71 billion, driven by high-bandwidth memory (HBM) demand. Yet its shares have only rallied 35% YTD (from $60 to $81), underperforming the SOX’s +7.5% sector gain by roughly 40 percentage points. Meanwhile, inventory levels ballooned to $7.2 billion—up 20% quarter-over-quarter—as buyers paused purchases, fearful of an impending price correction.
• SK Hynix
  SK Hynix reported flat Q1 sales of $6.15 billion, with DRAM and NAND inventories up 18% versus year-end 2024. Its stock has inched up just 12% YTD, compared to the +50% average among AI-linked peers. Investors have penalized the company’s broader exposure to commodity memory, rather than premium HBM and AI accelerators.
• Small-Cap Designers
  Firms with less than $10 billion in market cap—once hotbeds of AI innovation—have seen a median 25% stock decline this year. Venture funding into semiconductor startups has dropped 40% in H1 2025, leaving many small designers scrambling for capital and valuation support.

In sum, legacy fabs and memory-heavy businesses are paying the price for slower technology roadmaps and inventory imbalances, even as the AI accelerators rack up double-digit booms.

Key Drivers of the AI/Chip Upswing

Several concrete forces have combined to fuel this chip renaissance—each backed by eye-popping figures:

1. Generative AI Capex Explosion
   • Global spending on AI infrastructure is set to jump from $85 billion in 2024 to $150 billion in 2025—a stunning 80% surge.
   • In Q1 alone, hyperscalers placed orders for over 300,000 new AI accelerator units, more than double the 140,000 units shipped a year earlier.
   • Each modern AI rack now averages 5× more GPU compute power, driving orders of the latest chips at breakneck speed.
2. Cloud Datacenter Build-Out
   • Major providers (AWS, Azure, Google Cloud) lifted combined capex to $60 billion in Q1, up 30% quarter-over-quarter.
   • Server shipments to cloud operators climbed 22%, from 450,000 in Q4 2024 to 550,000 units in Q1 2025.
   • On average, each new rack now sports 2.5 GPU accelerator boards, versus 1.2 a year ago—more than doubling semiconductor demand per rack.
3. Geopolitical Supply-Chain Realignment
   • Anticipating U.S. export curbs, China-based firms boosted chip orders by 40% in late 2024, leading to a 30% surge in pre-cutoff shipments.
   • On-shoring incentives have unlocked over $32 billion in new fab investments: TSMC’s Arizona campus ($12 billion) and Intel’s Ohio gigafab ($20 billion).
   • These moves should shorten delivery times and stabilize pricing, even as global capacity tightens.
4. Secular vs. Cyclical Dynamics
   • While DRAM and NAND inventory destocking may continue through Q3—pressuring memory prices down by an estimated 10–15%—AI-specific accelerators surged 65% year-over-year in Q1, hitting $4.2 billion in sales.
   • High-bandwidth memory (HBM) sales doubled—up 120%—as specialized AI applications demanded faster, denser chassis.
   • This bifurcation underscores a durable, secular growth runway for AI-centric chips, offsetting the cyclical ebbs of commodity memory.

Together, these drivers have transformed select AI and semiconductor names into the most sought-after assets on the Nasdaq—backed by hard numbers that speak louder than any market narrative.

Technical & Sentiment Indicators

When it comes to reading the market’s mood, nothing tells the story like a handful of chart and sentiment metrics—with numbers that traders swear by.

• Nvidia (NVDA) RSI at 69.4
  On June 5, Nvidia’s 14-day Relative Strength Index hit 69.4—just a hair below the classic “overbought” threshold of 70. That tells you buyers have been pouring in almost non-stop: over the past month, NVDA closed above its 14-day high on 12 out of 20 trading days, a clear sign momentum remains alive.
• AMD (AMD) MACD crossover
  In mid-May, AMD’s 12-day Exponential Moving Average (EMA) pushed above its 26-day EMA by roughly 1.8 points, registering a bullish MACD histogram reading. Historically, that kind of crossover has marked the start of a sustained uptrend for AMD—its shares rose an average of 18% over the next four weeks after the last three such signals.
• Broadcom (AVGO) shooting-star reversal
  On June 2, Broadcom printed a “shooting-star” candlestick above its 200-day moving average (around $680) on a one-day volume spike of 12 million shares—50% above its 30-day average of 8 million. That pattern often foreshadows short-term consolidation, suggesting traders may take some profits off the table after AVGO’s 48% YTD gain.
• Semiconductor put/call ratio at 0.72
  Options traders have grown more bullish: the aggregate put/call ratio for major chip names fell from 0.90 in early May to 0.72 today—a 20% drop indicating heavier call buying versus hedging puts. Lower ratios typically coincide with rising prices, reinforcing the momentum story.
• ETF fund flows: +$3.5 billion
  Since May 15, semiconductor-focused ETFs have absorbed a net inflow of $3.5 billion, lifting their combined assets under management to $38 billion. That sustained capital flow underscores confidence in the space and serves as fuel for the next leg up—until those flows reverse, the bullish technical signals carry extra weight.

Valuation & Fundamental Considerations

Big gains often come with big multiples—and right now, AI-chip leaders sit at the lofty end of their historical ranges. Here’s how the key names stack up as of early June 2025:

Ticker	P/E (TTM)	EV/EBITDA	Revenue Growth ’25E	FCF Yield	Dividend Yield
NVDA	45×	38×	22%	4.2%	0%
AMD	100×	75×	18%	2.8%	0%
AVGO	30×	22×	15%	6.8%	3.1%

• Nvidia’s premium
  Trading at 45 times trailing earnings, Nvidia sits well above its five-year average P/E of 35×. Yet with analysts forecasting 22% top-line growth—driven by ongoing Blackwell Ultra rollouts—and $12.7 billion in free cash flow over the last 12 months (a 4.2% yield), the multiple still has room if execution stays on track.
• AMD’s optimism baked in
  AMD’s 100× multiple reflects sky-high expectations. Its $3.2 billion in LTM free cash flow (a 2.8% yield) and 54% gross margins validate some of the enthusiasm—but at 100×, even a small miss in data-center adoption could send the stock reeling.
• Broadcom’s hybrid moat
  At 30 times earnings and 22 times EV/EBITDA, Broadcom sits closer to the S&P 500’s tech average. Its $6.5 billion of annual free cash flow (6.8% yield) and 3.1% dividend offer a cushion against cyclicality, while the 25% growth in its software arm helps stabilize revenue.

In essence, the fundamentals justify these valuations—provided growth stays in the high-teens to low-twenties and policy shocks don’t disrupt the AI capex wave. Investors weighing further upside must balance those lofty multiples against the clear evidence of durable cash generation and rapid expansion in AI workloads.

Risks & Potential Headwinds

Even the most exciting rallies can stumble—especially when powerful headwinds kick up. Here are the top four risks, each backed by numbers that remind us why vigilance matters:

• Interest-Rate Uncertainty:
  The Federal Reserve’s target range sits at 25–5.50%, and markets assign only a 40% chance of a rate cut by September. If rate cuts slip into year-end, the extra 25 basis points in discount rates could shave roughly 7% off the present value of high-growth tech earnings—enough to erase a month’s worth of gains for names trading at lofty multiples.
• Export-Control Charges:
  In Q1, Nvidia and AMD absorbed a combined $6.2 billion in write-downs tied to U.S. export restrictions. Industry chatter suggests a second wave of controls could tack on another $3–4 billion in charges, effectively trimming 150–200 basis points off their gross margins and slowing the free-cash-flow machine fueling these stocks.
• Memory-Cycle Headwinds:
  DRAM and NAND pricing is forecast to decline 10–15% through year-end, a hit to a global memory market worth roughly $75 billion. If realized, vendors could see $7.5–11.3 billion in combined revenue evaporate—not a small sum when even giants like Micron and SK Hynix are wrestling with bloated inventories near $7 billion.
• Antitrust & M&A Scrutiny:
  Regulators in the EU and U.S. are scrutinizing chip-software tie-ups more closely. Broadcom’s pending deals alone face an up to 30% chance of delay or divestiture—potentially costing $1.8 billion in annual revenue growth (about 3% of its run-rate top line) if approval timelines stretch past late 2025.

Taken together, these factors could turn a smooth sprint into a choppy jog—underscoring why balancing aggressive positioning with protective measures remains crucial right now.

What’s Next: Scenarios & Strategies

Looking ahead, three clear scenarios emerge—each carrying its own set of risks and rewards, with actionable ideas to match:

1. Base Case – Narrow Leadership Continues:
   • Outlook: Nvidia, AMD, and Broadcom each deliver mid-20% total returns by year-end, while the broader Nasdaq Composite tacks on just +5%.
   • Strategy: A simple pair trade—long NVDA vs. short INTC—could capture an 8–12% targeted alpha, by betting on AI-driven outperformance over legacy fabs.
2. Bull Case – AI Ecosystem Breaks Out:
   • Outlook: A surprise mega-deal or breakthrough in generative-AI software lifts the semiconductor sector by +40% over six months, and propels the Nasdaq up +15%.
   • Strategy: Allocate 5% of your equity sleeve to three-month out-of-the-money NVDA calls (e.g., $180 strikes at a 5% premium), aiming for 20–30% upside on a sustained rally.
3. Bear Case – Fed Pushes Back Cuts:
   • Outlook: A hawkish Fed surprise keeps rates higher for longer, wiping out 15% of recent gains in high-multiple tech names and dragging the Nasdaq Composite down 10%.
   • Strategy: Consider collars on AMD positions—buy the stock, sell the $150 calls, and buy the $100 puts to cap your net exposure at ±10%, while collecting premium income.

No matter which path unfolds, the key is blending conviction with caution: use technical signals (RSI nearing 70, MACD shifts) to time entries and exits, and size positions so that any single scenario doesn’t upend your portfolio. By marrying clear, figure-backed outlooks with targeted tactics, investors can stay in step with this fast-moving, AI-powered market—where the next headline could deliver either a fresh wave of gains or a timely reality check.

Conclusion

The AI and chip sectors have emerged as the primary engines behind Nasdaq’s modest 2025 gains, with Nvidia, AMD, and Broadcom leading the charge amid robust demand for AI infrastructure. Yet, investors must remain vigilant of elevated valuations, policy risks, and the memory cycle’s lingering effects. By combining fundamental conviction with technical discipline and scenario-based strategies, market participants can position themselves to capture the next leg of this transformative rally—while guarding against its potential pitfalls.