Chip and computer hardware stocks pushed higher again Thursday as signs of a rosier outlook in PCs helped
advance for the 12th straight session.
Shares of Intel, the world's largest chipmaker, have lost ground in only one session in May, tacking on 16% during the month. On Wednesday, shares added another 1% to $27.29 -- an 11-month high. The Philadelphia Semiconductor Index added 1.8% to stand at a two-and-a-half-month high.
The broader market also rose Thursday in response to an upward revision of first-quarter GDP for the first quarter. Tech stocks received an extra boost from research firm Gartner, which tweaked its PC unit sales forecast higher to reflect 10.2% growth in 2005, up from a previous target of 9.9%.
Gartner's more bullish forecast was based mostly on the strength of notebook computer sales. Shares of all the major box makers rose, with
leading the way.
Tech stocks have picked up momentum throughout May. Chip stocks, in particular, have accelerated as
investors have gained confidence in the prospect for a seasonal uptick -- or better -- during the final half of the year. The sector also was helped by first-quarter results that mostly met expectations and didn't foretell of an upcoming catastrophe.
Also Thursday, semiconductor research firm IC Insights increased a couple of its target points for the year on the strength of global economic conditions in the first quarter. IC Insights now expects global electronic system sales to increase 4%, up from an earlier target of 2%, and it forecasts a 4% increase in chip selling prices, compared with an earlier call for an average selling price decline of 2%.
However, the firm doesn't see the first-quarter strength lasting throughout the year. "With the better than expected start of the first quarter 2005, IC Insights is currently in the unusual situation of raising its IC
chip market and worldwide GDP forecasts for 2005, while expecting both of these areas to lose momentum in the second half of the year," wrote Bill McClean, president of the Scottsdale, Ariz.-based firm.
Similarly, Gartner cautioned that slower growth looms as computer replacement by businesses becomes less of a factor for the balance of the year, while home consumer replacements will fade during 2006. "This one-two punch will push market growth back into single-digits by next year despite stronger mobile PC growth," said George Shiffler, principal analyst at Gartner.