Chip stocks rallied Thursday, thanks to bullish sentiment on the industry and a couple of Wall Street upgrades on high-profile semiconductor names.
And Advanced Micro Devices' (MCHP - Get Report) shares advanced nearly 7% to $14.56 when Stifel Nicolaus analyst Cody Acree upgraded the company to a short-term trading buy, after 18 months of keeping a neutral rating on the company.
The upgrades added juice throughout the chip sector, helping to propel The Philadelphia Stock Exchange Semiconductor Sector index nearly 3% to a new 52-week high of 511.52.Thursday's gains marked the second semiconductor rally in the past week, as investors appear to sense an improving business environment for chipmakers. "You're getting to the end of the June quarter, and I think investors, as they are checking in with these companies, for the most part are hearing that things are good," says Dan Niles of Neuberger Berman Technology Management. And after three years of underperformance, the semiconductor sector is poised for a pickup, says Niles, whose firm is bullish on semiconductor stocks. The SOX is trading at roughly the same level as it did in January 2004. In the same period, the Nasdaq has gained 30%, and the S&P 500 has risen 36.5%.