The Direxion Daily Semiconductors Bull 3x Shares (SOXL) ETF soared 6.99% in pre-market trading on Friday, significantly outperforming the broader market. This surge was driven by a strong rally in semiconductor stocks, fueled by growing demand for artificial intelligence (AI) chips and components.
Leading the charge was semiconductor giant Broadcom (AVGO), which skyrocketed 13% after forecasting that its AI product sales are expected to surge 65% in the first quarter, significantly outpacing its overall semiconductor growth of around 10%. Broadcom also predicted that the addressable market for AI components it designs for data center operators could reach as high as $90 billion by fiscal 2027.
The AI boom is driving a spending frenzy among hyperscalers and cloud providers, who are investing heavily in AI infrastructure and components to meet the rising demand for generative AI services. This has created a tailwind for semiconductor companies like Broadcom and others in the sector, as they position themselves as major beneficiaries of this trend by securing new hyperscaler customers and expanding their AI chip offerings.
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