A reversal of fortune for chipmakers helped power a rally in the technology sector this afternoon. Just yesterday, semiconductor stocks were badly beaten after analysts at Salomon Smith Barney downgraded the group.

Today,

Chase H&Q

and

Donaldson Lufkin & Jenrette

came to the rescue. Despite recent share-price losses, the analysts stated that the chipmakers' growth cycle is not over yet. Chase analyst Eric Chen wrote, "Our analysis does not indicate any major issues with slowing semiconductor unit growth and record capital spending."

The

Philadelphia Stock Exchange Semiconductor Index

closed up 48.3, or 4.5%, to 1119.1.

Advanced Micro Devices

(AMD) - Get Report

lifted 2 1/8, or 2.8%, to 77 3/8, while

Intel

(INTC) - Get Report

boosted 5, or 3.8%, to 136 5/8.

Also on the upside,

Universal Access

(UAXS)

, a provider of Internet network-infrastructure services, was solidly higher in midday trading.

Goldman Sachs

upgraded the stock to the U.S. Recommended for Purchase List from a previous market outperformer rating. The stock closed up 4 7/8, or 19.9%, to 29 7/16.

The

Nasdaq Composite Index finished ahead 97.47, or 2.52%, to 3960.57.

TheStreet.com Internet Sector

index moved ahead 8.10, or 0.99%, to 825.30.

On the downside, Wall Street business Internet services provider

FirstWorld Communications

(FWIS)

got burned, after stating Wednesday that second-quarter revenue would fall short of analyst expectations. On top of that announcement, the company declared that its president and chief executive, Sheldon Ohringer, had resigned. FirstWorld plunged 5 17/32, or 57.5%, to 4 3/32.

Bear Stearns

,

Deutsche Banc Alex. Brown

, and

PaineWebber

hacked their ratings of the company's stock. According to Bear Stearns' research note, FirstWorld's announcement raises a yellow flag about the company's business and the predictability of its financial results.

Similarily, Bear Stearns,

Goldman Sachs

and

Morgan Stanley

went after

Visual Networks

(VNWK)

, which manages traffic flow for Internet companies, after the company announced that revenue would not meet expectations for the second quarter. Visual Networks expects earnings to be 1 cent per share for the quarter, lower than the five-broker

First Call/Thomson Financial

6 cents consensus. Visual Networks plummeted 14 1/4, or 54.3%, to 12.

2:23: Profit-Warning Techs Pummeled

Two roads diverged from Wall Street this afternoon, and technology shares traveled both. While many tech shares traveled the green, those that warned investors of disappointing profits went the way of the red.

Internet services provider

FirstWorld Communications

(FWIS)

got burned after stating Wednesday that second-quarter revenues would fall short of analyst expectations. On top of that announcement, the company said its president and chief executive, Sheldon Ohringer, had resigned. FirstWorld plunged 5 3/4, or 59.7%, to 3 7/8.

Bear Stearns

,

Deutsche Banc Alex. Brown

and

PaineWebber

hacked their ratings of the company's stock. According to Bear Stearns' research note, FirstWorld's announcement raises a "yellow flag" about the company's business and the predictability of its financial results.

Similarily, Bear Stearns,

Goldman Sachs

and

Morgan Stanley

targeted

Visual Networks

(VNWK)

, downgrading the company that manages traffic flow for Internet companies. The company announced that revenue would not meet expectations for the second quarter. Visual Networks expects earnings to be 1 cent per share for the quarter, lower than the five-analyst

First Call/Thomson Financial

6 cents consensus. This afternoon, Visual Networks plummeted 15, or 57.1%, to 11 1/4. The stock was the

Nasdaq's

third most actively traded name, with 14.6 million shares changing hands.

Radcom

(RDCM) - Get Report

, a maker of test and analysis equipment for the communications industry, also felt the wrath of Wall Street today. On Wednesday, the company warned that its second-quarter earnings will fall below expectations because of a delay in order approvals for two key customers. The Israel-based company said it would record a loss in the range of 8 cents to 10 cents a share, while analysts had expected the company to lose 1 cent a share. Radcom lost 5/8, or 10.3%, to 5 7/16.

In afternoon trading, the

Nasdaq Composite Index was up 29.4, or 0.76%, to 3892.5.

TheStreet.com Internet Sector

index was off 4.25, or 0.52%, to 812.95.

Chase H & Q

and

Donaldson Lufkin & Jenrette

helped rescue the semiconductor industry today. Despite recent losses, the analysts believe the chipmakers growth cycle is not over yet. Chase analyst Eric Chen wrote, "Our analysis does not indicate any major issues with slowing semiconductor unit growth and record capital spending."

Just yesterday, the sector was beaten down badly after analysts at

Salomon Smith Barney

downgraded the group. Lately, the

Philadelphia Stock Exchange Semiconductor Index

was up 3%.

Advanced Micro Devices

(AMD) - Get Report

lifted 1 11/16, or 2.16%, to 76 7/8, while

Silicon Storage Technology

(SSTI) - Get Report

slumped 3 7/16, or 4.2%, to 80 3/8.

On the upside,

Universal Access

(UAXS)

, a provider of Internet network infrastructure services, was solidly higher in midday trading. The stock was up 3 5/16, or 13.5%, to 27 7/8.

10:36: Tech Continues to Slump; Visual Networks the Day's Big Loser

After suffering through a lousy day yesterday, technology stocks were trying to turn it around this morning, as some money was coming back into the Internet and the battered semiconductor sectors.

Visual Networks

(VNWK)

, which provides service management for Internet companies, was off sharply this morning after announcing that revenue would not meet expectations for the second quarter.

The company expects earnings to be 1 cent per share for the quarter, lower than the five-broker

First Call/Thomson Financial

consensus for 6 cents. The stock was lately down 15 1/16, or 57.4%, to 11 3/16 and was the

Nasdaq Stock Market's most actively traded name, with 11.1 million shares changing hands.

Internet bellwether

Yahoo!

(YHOO)

saw a brief lift out of the gate, but has slumped recently. The shares were off 1/16, or 0.05%, to 120 3/4 out of the gate. Most other well-known Internet names were nearly unchanged in the early going, however.

Exodus Communications

(EXDS)

was a heavily trafficked stock, with 28.5 million shares traded. The stock was lately down 4.4%.

A research report by

Donaldson Lufkin & Jenrette

was viewed as supporting the semiconductor sector today, which was beaten down badly after analysts at

Salomon Smith Barney

downgraded the group yesterday. Lately, the

Philadelphia Stock Exchange Semiconductor Index

was off just 0.1%.

Siebel Systems

(SEBL)

, a provider of e-business application software, was losing ground despite the announcement of a joint venture with

Sprint PCS

(PCS)

. In early trading, the stock was down 0.7%.

Universal Access

(UAXS)

, a provider of Internet network infrastructure services, was solidly higher in early trading. The stock was up 11.5%, making it one of the bigger percentage gainers early in the day.