US Markets Mixed: Micron Surges on AI Optimism as Apple Shares Slide

Wall Street experienced a tug-of-war on Thursday as massive gains in the semiconductor sector struggled to offset significant losses in major technology giants. While the Dow Jones found upward momentum driven by the artificial intelligence boom, the Nasdaq Composite faced downward pressure due to cooling sentiment around consumer electronics.

AI Chipmakers Lead the Charge

The primary driver of market optimism was the semiconductor industry, specifically companies positioned to benefit from the artificial intelligence revolution. Micron Technology emerged as the standout performer, with its stock surging 9.7%. The memory-chip maker reported quarterly profits and revenues that exceeded Wall Street estimates and provided a robust revenue forecast for the upcoming quarter. This strong performance helped quell investor fears that AI-linked stocks had become overvalued.

Similarly, Qualcomm saw its shares climb 3.1% after providing an optimistic long-term growth outlook. The company projected that the rapid expansion of AI would drive its non-smartphone revenue—including data centers—to reach USD 40 billion by fiscal year 2029. This rally in chips was also mirrored in Asian markets, where South Korea's SK Hynix jumped 13.1%, fueling a 5.4% surge in the Kospi.

Apple Faces Headwinds from Price Hikes

In contrast to the semiconductor rally, Apple Inc. faced a challenging trading session, with shares dropping 4.8%. The decline follows reports that the tech giant is implementing price increases across several product lines. Analysts noted that Mac computers could see price hikes ranging between 15% and 20%.

The pressure on Apple is twofold: rising consumer prices and increasing production costs. Higher memory and storage costs, which are currently benefiting semiconductor manufacturers, are simultaneously driving up expenses for device makers like Apple, potentially squeezing profit margins or deterring price-sensitive consumers.

Inflation Data and Treasury Yields

Broader market sentiment was also influenced by US macroeconomic indicators. The Personal Consumption Expenditures (PCE) index, a key inflation gauge, showed consumer inflation accelerating to 4.1% in May from 3.8% in April. While this was a rise, it largely aligned with economists' expectations, preventing a wider market sell-off.

This data contributed to a slight easing in Treasury yields. The benchmark 10-year US Treasury yield retreated to 4.36%, down from 4.41% on Wednesday and 4.56% earlier this month. Additionally, a cooling energy market provided some relief; Brent crude slipped 0.1% to USD 73.81 per barrel, easing fears of persistent inflationary pressure from energy costs.

Key Takeaways

  • AI Momentum: Micron's 9.7% jump and Qualcomm's $40 billion revenue target underscore the continued strength of the AI-driven semiconductor cycle.
  • Consumer Tech Pressure: Apple's 4.8% slide highlights the risks of rising component costs and the potential impact of significant price hikes on consumer demand.
  • Macro Stability: While inflation rose to 4.1%, the fact that it met expectations helped stabilize Treasury yields and provided a floor for the Dow Jones.