U.S. semiconductor stocks moved higher on Wednesday after South Korean chipmaker SK Hynix reported record quarterly profit, boosting sentiment around artificial intelligence (AI) demand ahead of earnings from Alphabet and Microsoft.
SK Hynix's U.S.-listed American depositary receipts (ADRs) jumped 12.17% to $163.05 as of 11:41 a.m. ET on Oct. 28, according to the real-time market data. The strong performance lifted sentiment across the semiconductor sector, with Micron Technology and Advanced Micro Devices (AMD) also trading higher.
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Micron shares gained 4.67% to $972.17 as of 11:42 a.m. ET, while AMD rose 1.13% to $566.59 at the same time. The broader chip rally also extended to other AI-linked companies, with Arm Holdings and Marvell Technology gaining around 2%.
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The gains come as investors look for fresh signals on the sustainability of the AI trade, which has faced renewed scrutiny in recent weeks over the cost of financing the technology buildout and the returns companies can generate from their investments.
Attention is now turning to quarterly results from Alphabet and Microsoft, two members of the so-called Magnificent Seven group of mega-cap technology stocks. Both companies are scheduled to report their latest earnings after Wednesday's market close, putting their AI spending plans, cloud businesses and growth outlooks under the spotlight.
Alphabet shares were last up more than 1%, while Microsoft was little changed, according to the market update.
Despite the strength in semiconductor stocks, broader U.S. equities remained relatively subdued as investors awaited the Federal Reserve's latest interest-rate decision.
The S&P 500 and Nasdaq Composite traded around the flatline, while the Dow Jones Industrial Average rose 96 points, or 0.2%.
The Fed is widely expected to leave its benchmark interest rate unchanged at 3.75%-4%, following a quarter-percentage-point increase at its September meeting. According to the CME FedWatch tool, markets were pricing in roughly a 90% probability of rates remaining unchanged.
Investors will also assess the tone of the central bank's policy statement for clues about the outlook for borrowing costs. Glen Smith, chief investment officer at GDS Wealth Management, described Wednesday's meeting as more likely to provide an update than deliver a policy change, while anticipating a continuation of the hawkish language used by Fed Chair Kevin Warsh.
Elsewhere, rising crude oil prices added to pressure on the bond market. U.S. West Texas Intermediate crude futures climbed 2.8% to $102.72 a barrel, while Brent crude futures advanced around 1.6% to $115.67.
The move pushed Treasury yields higher, with the 10-year Treasury yield rising more than three basis points to 5.024%. The 30-year yield gained more than two basis points to 5.326%.
For semiconductor investors, the combination of SK Hynix's record profit and upcoming Big Tech earnings could provide an important test of whether AI-related demand remains strong enough to support elevated valuations across the sector.
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