When the chips are up

Tech has driven the market’s rebound off the late-March lows, and the semiconductor group has been the fuel for that drive. Rallies in chip stocks like Micron (MU), Advanced Micro Devices (AMD), and Intel (INTC) have only accelerated in recent weeks, and the PHLX Semiconductor Index (SOX) has jumped nearly 70% since March 30.

The perceived shortage of “compute” required for AI datacenters has driven outsized price moves not just in these well-known names, but in other AI/chip-adjacent stocks that were likely not on many traders radar a few months ago.

These stocks were well represented on Wednesday’s LiveAction scan for unusually high call options volume. In addition to Maxlinear (MXL), Wolfspeed (WOLF), two AI-related stocks, Penguin Solutions (PENG) and Everspin Technologies (MRAM), had the day’s heaviest relative call activity—roughly 66 and 40 times average, respectively:

Known as SMART Global Holdings until about a year and a half ago, PENG is an AI infrastructure company with a strong presence in the datacenter space, as well as a foot in the flash memory arena. Everspin, as its ticker symbol suggests, specializes in specializing in magnetic memory technology.

Both stocks had very good Aprils and (so far) even better Mays. To put their recent rallies into perspective, the following chart compares their performance since March 30 to that of Sandisk (SNDK), a stock that arguably became the face of the AI-driven storage and memory “crunch” as it rallied more than 3,300% over the past year. While neither PENG nor MRAM can match that performance, both have outgained SNDK over the past six weeks:

Both stocks also followed a similar path on Wednesday, jumping to double-digit percentage gains intraday before reversing [to close in the bottom half of the day’s range].

While it’s true that exceptionally large price moves often reverse—at least partially or temporarily—“often” is not “always,” and as “Rethinking ‘overbought’” noted, the challenge of identifying such inflection points in real time cannot be overestimated. While Wednesday’s intraday reversals in PENG and MRAM—especially the latter [, which closed flat/down for the day after being up as much as 17%]—suggested a collapse of bullish momentum, history shows such “signals” can sometimes be false flags.  

For example, PENG has rallied 20% or more intraday eight other times before Wednesday. Five trading days later the stock was lower four times and higher the other four—and the average price jump for the four times the stock rallied was more than 10%. Understanding that all trends eventually run their course isn’t the same as seeing the twists and turns in the road before they appear.

Just as “don’t try to catch a falling knife” is intended to prevent bargain hunters from buying stocks that may be imploding rather than correcting, traders and investors also have to be cautious about “peering into live volcanoes,” since you never know when the next eruption could occur.

Market Mover Update: Morgan Stanley & Co. strategists raised their 12-month target for the S&P 500 to 8,300, preferring cyclicals over defensives and large caps over small caps. In addition to favoring the AI hyperscalers, they also see potential relative sector strength in industrials, financials, and consumer discretionary goods.¹

Today’s numbers include (all times ET): weekly jobless claims (8:30 a.m.), Retail Sales (8:30 a.m.), Import and Export Prices (8:30 a.m.), Business Inventories (10 a.m.), EIA Natural Gas Report (10:30 a.m.).

Today’s earnings include: Canadian Solar (CSIQ), Klarna (KLAR), Yeti (YETI), Applied Materials (AMAT).

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¹ MorganStanley. US Equities Mid-Year Outlook: Déjà Vu All Over Again...with Some Twists. 5/13/26.