The kind of gains in six months you might normally expect over decades
In the first half of 2026, the ancient human hunger for the next transformative tool found its expression not in software or services, but in the unglamorous silicon wafers that make artificial intelligence possible. Chipmakers in South Korea and the United States saw share prices multiply in months rather than decades, as the race to build AI infrastructure collided with the hard limits of what factories could produce. The windfall was not evenly distributed — software giants fell out of favor, consumers paid more for their devices, and by late June, the first tremors of profit-taking suggested that even the most extraordinary booms carry within them the seeds of their own correction.
- The scramble for AI chips became so intense that supply simply could not keep up, sending memory prices — and the stocks of companies like SK Hynix, Sandisk, and Micron — into territory that would normally require a lifetime of patient investing to reach.
- The frenzy reshuffled the entire technology landscape: money fled software giants like Microsoft, whose shares dropped 24%, as investors decided the real prize was the hardware underneath the AI revolution, not the services built on top of it.
- The cost pressure spread beyond Wall Street — Apple raised prices on iPads and MacBooks, citing chip costs, and was reportedly seeking permission to buy from a Pentagon-blacklisted Chinese supplier, revealing just how strained the supply chain had become.
- By late June, the momentum began to crack: chip stocks retreated from their highs as investors locked in gains and rotated elsewhere, with analysts noting a market mood of selling first and asking questions later.
- Despite the turbulence, broader indices held firm, and UBS projected the S&P 500 reaching 8,200 by mid-2027 — a forecast resting on the bet that AI spending will remain a durable force rather than a passing fever.
The first half of 2026 belonged to chipmakers. As artificial intelligence reshaped how businesses operated, investors fixed their attention on something more immediate: the companies supplying the hardware that made it all run. Some of those stocks multiplied three times over — or far more — in just six months.
South Korea's Kospi index posted its strongest opening half since at least 1990, with Samsung rising 183% and memory chipmaker SK Hynix surging 310% as AI firms raced to secure processors and memory for their data centers. Across the Pacific, the moves were even more dramatic. Sandisk climbed 780% in the first half of the year alone — after already gaining 4,510% in the prior twelve months. Micron rose 296%, Western Digital 240%, Seagate 226%. The logic was simple: demand vastly exceeded supply, scarcity pushed prices up, and higher prices on higher volumes created what one analyst called "a powerful cocktail for explosive earnings growth."
The rotation was stark. Money that had flowed into software and AI service companies began moving into semiconductor manufacturers instead. Microsoft fell 24% and hit a one-year low, while other large AI platform companies saw their shares decline as investors grew skeptical of their capital-intensive expansion plans. The chip boom also rippled into consumer prices — Apple raised the cost of iPads and MacBooks, citing memory chip expenses, and was reportedly seeking government clearance to source chips from a Chinese manufacturer the Pentagon had blacklisted.
By late June, the run showed signs of fatigue. Chip stocks pulled back from their highs as investors took profits and rotated into other sectors. Yet the broader picture remained constructive: Japan's Nikkei gained 38% for the half, the S&P 500 rose 7.4%, and UBS forecast the index reaching 8,200 by June 2027, supported by sustained AI investment and a resilient economy. The open question was whether the recent cooling was a pause or the beginning of something longer.
The first half of 2026 belonged to the people who make chips. While the world watched artificial intelligence reshape how companies operate, investors were watching something more immediate: the stock prices of the manufacturers supplying the hardware that powers it all. Some of those companies have seen their share values multiply three times over, or more, in just six months—gains that would normally take decades to accumulate.
South Korea's Kospi index climbed 125% in the first half of the year, its strongest opening half since at least 1990. Two companies drove much of that surge. Samsung's share price jumped 183% from January through June. SK Hynix, which makes memory chips, rose 310% over the same period. Both companies reported surging demand as AI firms raced to secure the processors and memory needed to power their data centers. The competition for chips was fierce, and supply could not keep pace.
Across the Pacific, American chipmakers experienced even more dramatic moves. Sandisk shares climbed 780% in the first half of 2026 alone—and that was after already gaining 4,510% over the previous twelve months. Western Digital, which makes digital storage systems, rose 240%. Micron gained 296%. Seagate added 226%. Dan Coatsworth, head of markets at the investment platform AJ Bell, described the scale of these moves with precision: "The kind of gains in six months you might normally expect over decades with investing." The math was straightforward. Demand vastly exceeded what manufacturers could produce. That scarcity drove memory chip prices upward. Higher prices combined with higher volumes created what Coatsworth called "a powerful cocktail for explosive earnings growth."
The shift in investor appetite was stark and consequential. Money that had flowed into software companies and the large AI firms building services began moving into hardware manufacturers instead. Microsoft, one of the world's most valuable companies, fell 24% during 2026 and hit a one-year low in recent weeks. Other hyperscalers—the companies rolling out AI services to customers—saw their shares decline as investors rotated out of software and into semiconductors. Some investors had grown skeptical of the enormous spending plans announced by leading AI companies. Those capital-intensive strategies meant higher borrowing costs and cash drain that would weigh on future earnings.
The rising cost of chips rippled outward into consumer prices. Apple blamed increased memory chip costs for price increases on iPads and MacBooks announced last week. The company was also reportedly seeking clearance from the Trump administration to purchase memory chips from CXMT, a Chinese manufacturer that the Pentagon has blacklisted, suggesting the supply constraints were real enough to push even major corporations toward unconventional solutions.
By late June, however, signs emerged that the momentum was shifting. Chip stocks had begun retreating from their recent highs as investors took profits and rotated into other sectors. Chris Beauchamp, chief market analyst at the trading platform IG, observed the pattern: "Having piled in to AI and tech since the end of March, there is a desire to protect profits, and investors continue to be in a mood to sell first and ask questions later." The spectacular run was showing signs of fatigue.
Still, the broader market picture remained positive. Japan's Nikkei index climbed 38% in the first half. The S&P 500 gained 7.4%, closing the first week of the second half at 7,354 points. The UK's FTSE 100 rose 5.8%, though it had fallen back from a record high in February when the Iran war unsettled investors. Oil prices, which began the year at $60 a barrel, had climbed to around $72 by the end of June, after spiking above $120 in late April when the closure of the Strait of Hormuz created supply fears.
Looking ahead, UBS Global Wealth Management's chief investment officer Mark Haefele predicted continued strength. He forecast the S&P 500 would reach 8,200 points by June 2027, supported by sustained AI capital spending, a resilient American economy, and ongoing government spending worldwide. The question hanging over markets was whether the chip boom would sustain that optimism, or whether the recent profit-taking signaled a longer correction ahead.
Notable Quotes
Demand exceeding constrained supply led to a surge in memory chip prices and took suppliers' shares on a spectacular ride upwards. Higher selling prices and greater demand is a powerful cocktail for explosive earnings growth.— Dan Coatsworth, head of markets at AJ Bell
Our base case sees continued strength in AI capital expenditure, a resilient US economy, ongoing fiscal spending around the world, and strong credit creation continuing to support corporate earnings growth and markets more broadly.— Mark Haefele, chief investment officer at UBS Global Wealth Management
The Hearth Conversation Another angle on the story
Why did chip stocks move so much faster than everything else this year?
Because they were the actual constraint. AI companies needed chips to build their data centers, but manufacturers couldn't make them fast enough. When supply is tight and demand is desperate, prices move violently—and so do the stocks of the companies selling at those prices.
But Microsoft and the other big AI companies are down. Shouldn't they be winning?
They're spending enormous amounts of money to build the infrastructure. That capital intensity worries investors. The chip makers are selling to them at premium prices and making huge margins. It's a cleaner business model right now.
Is this sustainable? Can chip stocks keep going up?
That's what the profit-taking in late June suggests investors are asking themselves. The gains have been so extreme that people are locking in wins. Whether it lasts depends on whether AI spending actually justifies the valuations—or whether it was just a feeding frenzy.
What about Apple raising prices? That seems like a real cost.
It is. But it also shows how acute the shortage is. Apple is so desperate for chips that it's even asking the government to let it buy from a Chinese company the Pentagon blacklisted. That's how tight things are.
So the chip makers are winning for now.
For now. But markets move on expectations, not just current reality. If investors start doubting whether AI spending will continue at this pace, the rotation could reverse just as quickly as it happened.