Micron led the gains among chipmakers with a notable 10.6% increase, while companies that manufacture chip-making equipment, such as Applied Materials, Lam Research, and KLA Corp, saw their shares rise between 5.1% and 5.5%.
The Philadelphia Semiconductor Index reached its highest level since mid-October, closing up 3.9%. The index has surged over 19% in 2024.
The tech-focused Nasdaq index propelled Wall Street's major indexes upward, with semiconductor stocks in Europe and South Korea also experiencing significant gains earlier in the day.
Citigroup remarked that while Microsoft's investment plan aligned with analysts' expectations, it represented a "modest positive" development by alleviating concerns over potential reductions in capital expenditure.
"AI data centers require substantial amounts of chips, which is driving interest in the semiconductor sector right now," stated Michael Matousek, head trader at U.S. Global Investors.
Additionally, Foxconn's record revenue for the fourth quarter, driven by robust demand for AI servers, contributed to the overall optimism in the chip industry.
Nvidia, a client of Foxconn, saw its shares rise by 5.1%. The company's CEO, Jensen Huang, is scheduled to deliver a keynote address at the CES trade show later today. Super Micro Computer, a manufacturer of AI servers, experienced a 10.3% jump in its stock price.
Despite concerns about a slowdown in revenue growth indicated by Nvidia's quarterly results in November, the overwhelming demand for the company's AI chips, which lead the market, overshadowed these worries.