Few days ago chip stocks were getting destroyed across two continents. Thursday changed everything. Microsoft reported. Azure beat. Confidence came flooding back. Chip names that were down 15% last week gained 25% in a single session.
What Thursday Actually Looked Like
Dow gained 614 points or 1.2% Thursday. S&P 500 jumped 122 points or 1.7%. Nasdaq did the heavy lifting surging 680 points or 2.8%. Full reversal from the selling that had dominated the prior week.
Microsoft was the catalyst. Stock rocketed 16% after reporting stronger than expected Azure cloud growth. That single result did more to restore confidence in the AI trade than anything that had happened in the previous two weeks of selling. Azure beating means hyperscaler AI spending is generating actual revenue. That is the proof investors had been demanding and Microsoft delivered it.
Results set off a chain reaction across everything connected to AI infrastructure. Chipmakers, cloud providers, power companies. All of them ripped higher on the same session.
Chip Numbers Were Extraordinary
Sandisk surged 26% Thursday. Stock had lost roughly half its value from its all time high in the preceding month. Gained a quarter of its value back in one day.
Nebius gained 27%. Micron jumped 18%. CoreWeave added 21%. Bloom Energy climbed 27%. Across the entire AI infrastructure supply chain buyers came back hard and fast.
These are the same stocks that were down 10 to 15 percent earlier in the week. Same companies. Same businesses. Nothing changed fundamentally between Monday’s selling and Thursday’s buying except Microsoft confirming that cloud AI revenue is real and growing.
Amazon Added to the Momentum After Hours
Amazon reported after the close Thursday and beat second quarter revenue expectations. AWS strength was the highlight. Cloud computing division showing that heavy AI investment is translating into customer spending.
Two major hyperscalers reporting in the same week and both showing AI driven revenue growth is exactly what the market needed to see. Alphabet’s spending announcement had spooked investors the prior week. Microsoft and Amazon showed the spending is working. Different message entirely.
Amazon surging more than 9% after hours added to the positive Friday morning setup. Combined with Microsoft’s 16% Thursday gain the message from two of the three largest cloud providers is that AI returns are materializing.
Apple Was the Exception
Apple delivered a 22% jump in iPhone sales and beat fiscal third quarter revenue expectations. Sounds like a great result. Stock dropped 6% anyway.
Weaker growth outlook spoiled it. Market at all time highs heading into results needed something that justified record valuations not just a beat against estimates. Guidance pointing to slower growth ahead was not what investors paying $337 per share wanted to hear. Pattern of beating current quarter numbers while disappointing on forward outlook kept playing out across earnings season.
Asia Took the Baton Friday
South Korea Kospi exploded more than 15% Friday. One of the largest single day gains for a major index in recent memory. SK Hynix and Samsung both surging hard after getting sold off brutally earlier in the week. Japan’s Nikkei jumped over 3%.
Kospi going from down 10% Tuesday to up 15% Friday in the same week illustrates the extreme volatility this market has been living in. Semiconductor stocks in particular have been moving in ranges that make normal investing framework difficult to apply. Conviction in either direction gets punished quickly.
The Aschenbrenner Story
On the other side of Thursday’s rally was Leopold Aschenbrenner. Former AI researcher who turned his thesis called Situational Awareness into a hedge fund making leveraged AI bets. No prior investing experience. Heavy leverage on AI positions.
July’s chip selloff was catastrophic for the fund. Situational lost roughly 67% in July according to WSJ reporting. Margin calls forced the firm to sell most of its public stock portfolio to Ken Griffin’s Citadel. Liquidated at or near the worst prices of the selloff.
Thursday’s 25% gains in the exact names the fund was betting on came too late. Leverage does not give you time to be right eventually. It demands you are right now. Aschenbrenner’s story is a reminder that being correct about a thesis long term means nothing if the short term volatility wipes you out before the thesis plays out.