AI Boom powers Chips and Software 26/06/2025

HOT stories for today

US market wrap:

• The market pulled back on Wednesday as oil rebounded from a sharp two-day sell-off driven by Middle East ceasefire hopes. The S&P 500 slipped 0.38%, the Nasdaq Composite dropped 0.52%, and the Dow Jones Industrial Average fell 0.34%, or 142 points. Investors grew more cautious after President Trump, speaking at a NATO summit, claimed the strikes on Iran’s nuclear sites were “devastating,” despite conflicting Pentagon assessments.
• Meanwhile, Fed Chair Jerome Powell testified before Congress, offering little new insight on macroeconomic policy but stressing the need for caution amid global instability. Despite Powell’s neutrality, the rate cut narrative gained traction. Morgan Stanley analysts now forecast the Fed will slash rates seven times in 2026—well above the central bank’s current outlook. Risk sentiment weakened slightly as markets reassessed the path forward for both policy and geopolitics.

AI Boom powers Chips and Software

• Semiconductor stocks have outperformed software names so far in 2025, as investors pour capital into AI infrastructure. The iShares Semiconductor ETF (SOXX) is up 43.7% since late April, compared to a 28.8% gain for the iShares Expanded Tech-Software Sector ETF (IGV). Nvidia, Broadcom, and Marvell have led the rally, fueled by record AI chip demand. Despite the hardware edge, analysts argue both segments are poised to benefit from the AI wave.
• Software companies like Oracle, Salesforce, and Adobe are actively integrating generative AI tools into their products, creating new monetization paths and strengthening client retention through cloud services. “Chipmakers are capturing the early upside,” said BofA’s Jared Woodard. “But long term, it’s the software layer that delivers the recurring revenue and scalability investors crave.” Wall Street strategists expect this dual AI boom to continue through 2026 as demand grows across sectors.

Stocks on the move:

• Micron (MU): Shares surged 5.4% after the company reported record quarterly revenue of $9.3 billion, driven by strong AI-related demand. Management guided for continued strength in memory chip pricing.
• H.B. Fuller (FUL): Shares climbed over 6% after the specialty adhesives maker posted better-than-expected quarterly earnings. Adjusted EPS came in at $1.18, beating the $1.08 consensus forecast, according to FactSet. The company also raised its full-year profit outlook, further boosting investor sentiment.
• Kratos Defense & Security Solutions (KTOS): The stock dropped nearly 7% after the defense and security contractor unveiled plans for a $500 million public offering of common shares, prompting dilution concerns among shareholders.
• MillerKnoll (MLKN): The furniture and interior design firm rallied 9% following strong Q4 revenue results. Sales reached $961.8 million, up more than 8% year-over-year. However, adjusted EPS declined to $0.60 from $0.67 last year, reflecting some margin compression.

Watchlist: MU, COIN, KTOS, SNOW, GOOGL, AVGO, TSLA

Today’s action

• Markets in Asia were mixed on Thursday, reflecting overnight U.S. weakness and oil’s rebound. Japan’s Nikkei 225 dropped 0.42%, while South Korea’s Kospi rose 0.29%. Hong Kong’s Hang Seng Index edged up 0.17%, lifted by tech sector gains. 
• U.S. stock futures showed little movement early Thursday. Dow futures were flat, while S&P 500 and Nasdaq 100 futures traded marginally higher. Oil held steady near $69.10, and Treasury yields were slightly lower following Powell’s congressional appearance. Markets now turn their attention to Friday’s core PCE inflation data and next week’s start to Q2 earnings season. With geopolitical tensions cooling, macro data and Fed commentary remain key drivers into month-end.

Bitcoin

• Bitcoin climbed above $107,800 on Wednesday, extending a three-day rally fueled by improved risk appetite and stable regulatory signals. The largest cryptocurrency is now up more than 8% this week, reclaiming technical levels lost during last weekend’s volatility.
• Ethereum (ETH) followed suit, rising 4.9% to $2,470, while altcoins like Solana (SOL), Polkadot (DOT), and Dogecoin (DOGE) added between 5% and 8%. Traders cited increasing ETF inflows and cooling geopolitical concerns as supportive catalysts.
  Watchlist: Bitcoin: 99,000–112,000, Ethereum: 1500–2800, Solana: 80–183

Forex

• EUR/USD hovered near 1.1650 on Thursday, bolstered by ongoing dollar softness and improving risk sentiment. The pair remains above key technical levels, with momentum indicators skewing bullish.
• USD/JPY traded around 146.80, little changed on the session. Traders are eyeing upcoming Japanese CPI data and continued commentary from BoJ officials for further clues on policy direction.
  Watchlist: EUR/USD: 1.0700–1.1650, USD/JPY: 140–151

Basic Materials

• WTI crude oil rose to $69.15 in early Thursday trade, recovering from this week’s steep declines. Investors continue to weigh Middle East developments and OPEC+ output expectations, while demand signals remain mixed.
• Gold (XAU/USD) held near $3,390 as easing geopolitical fears reduced safe-haven demand. However, a softer dollar and firm inflation support continued to underpin bullion near record highs.
  Watchlist: GOLD: 2600–3500, US Oil: 55.60–75.80

Key Economic Events Today:

EST time
08:30 am: USD Final GDP (QoQ)
08:30 am: USD Unemployment Claims
08:30 am: USD Core Durable Goods Orders
08:30 am: USD Trade Balance, Wholesale Inventories
10:00 am: USD Pending Home Sales
01:15 am: USD FOMC Member Barr Speaks

Earnings

BMO (Before the US Market opens):

MKC           McCormick and Company
WBA           Walgreens Boots
AYI             Acuity Inc.
AMC (After the US Market closes): NKE, CNXC




The TEFS Analyst team wishes you a successful day!