Wall Street is undergoing a profound restructuring of its AI investment thesis. NVIDIA, once the undisputed leader, is being sidelined by investors as capital floods into previously overlooked chip and hardware companies like Intel, AMD, and Micron Technology. This shift reflects a broader market bet on the long-term build-out of AI infrastructure.
This week's market action provides the clearest evidence. AMD and Intel each gained roughly 25% for the week, while memory chipmaker Micron Technology soared over 37%. Optical cable manufacturer Corning also rose about 18%. Year-to-date, all four companies have more than doubled their stock prices, with Intel leading the pack with gains exceeding 200%. In stark contrast, NVIDIA has risen only about 15% this year, performing in line with the Nasdaq index.
Mizuho analyst Jordan Klein characterized this phenomenon as a "changing of the guard" in the AI sector. The shift in market logic is driven by new hardware demands emerging as AI applications evolve from chatbots to AI agents, coupled with supply-demand imbalances caused by a global shortage of memory chips.
**Memory Shortage Propels Micron to Record Highs** A structural shortage in the memory market is a core driver of the current rally. Micron Technology's market capitalization surpassed $800 billion for the first time this week, with its stock price accumulating gains of over 750% in the past year.
Micron CEO Sanjay Mehrotra stated in a March interview with CNBC that due to tight supply, major customers are currently receiving only "50% to two-thirds" of their requested volumes. In a client note, Jordan Klein pointed out that when a market rapidly enters a tangible shortage, prices surge significantly while costs rise only moderately, investors overweighting the memory cycle's upswing will reap substantial rewards. "New capacity cannot come online quickly, it's that simple," he noted.
The global memory market is dominated by Micron Technology and South Korea's Samsung and SK Hynix, with the latter two also experiencing historic rallies.
**AI Agent Wave Reignites CPU Demand** As the focus of AI applications shifts from large model training to agent deployment, the strategic value of central processing units (CPUs) is making a comeback. Bank of America estimates the data center CPU market could more than double, growing from $27 billion in 2025 to $60 billion by 2030.
AMD's recent earnings report exceeded expectations across the board, with its data center business showing robust growth. CEO Lisa Su stated on the earnings call that AMD now expects the server CPU market to grow by 35% over the next three to five years, significantly higher than the 18% forecast given last November. In a CNBC interview, she added, "Agents are driving huge demand across the entire AI adoption cycle, and we're very excited to be a part of it."
Following the report, Goldman Sachs and Bernstein both upgraded AMD to a buy rating, citing structural tailwinds for CPU demand. A JPMorgan analyst noted that AMD's earnings "clarified the structural inflection point underway in server CPU and data center accelerator growth trajectories."
**Intel Stages Strong Comeback on Apple Order News** Intel's rebound is particularly noteworthy. The chip giant, which had fallen significantly behind in the AI wave, is experiencing a revival, bolstered by substantial U.S. government investment. Intel's stock achieved its largest-ever monthly gain in April, doubling in value, and then rose another 33% in early May.
According to a Bloomberg report, Apple is in talks with Intel and Samsung to produce main processors for its U.S. devices, sending Intel's stock up 13% in a single day. Subsequently, The Wall Street Journal reported that Intel and Apple had reached an agreement for Intel to manufacture some processors for Apple devices, pushing Intel's stock up another 14%. Representatives for both Intel and Apple declined to comment.
**Corning Secures Major Fiber Optic Deal with NVIDIA** In the new AI infrastructure landscape, fiber optic technology is also emerging as a key beneficiary. Glass and fiber optic manufacturer Corning signed a significant cooperation agreement with NVIDIA this week. The deal involves building three new U.S. factories dedicated to serving NVIDIA's optical technology needs, with NVIDIA gaining investment rights of up to $3.2 billion.
This partnership is seen as a critical step for NVIDIA's transition from copper cables to fiber optic cables to support the expansion of its rack-scale systems. NVIDIA CEO Jensen Huang told CNBC, "We're going to scale fiber production at a scale that the optics industry has never seen before," describing the current economy as undergoing "the single largest infrastructure build in human history." Earlier this year, Corning also signed a $6 billion fiber supply agreement with Meta Platforms, Inc., extending through 2030.
**Bubble Warnings Emerge, Analysts Flag Correction Risk** However, some analysts are beginning to draw parallels between the current semiconductor rally and the dot-com bubble era. BTIG analyst Jonathan Krinsky noted in a recent report that the magnitude of gains in the semiconductor sector mirrors that of 1999, warning of a potential 25% to 30% correction risk for the Philadelphia Semiconductor Index—which has surged 66% year-to-date.
"We have written repeatedly about how extreme the semiconductor rally has been—in many cases, a move not seen since the internet bubble," he wrote. "In some ways, this rally is actually more extreme than that one."
These warnings serve as a reminder to investors that while the long-term logic for AI infrastructure build-out remains intact, near-term valuation pressures and the risks highlighted by historical precedents cannot be ignored.
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