Lumentum Holdings and Applied Materials have significantly outperformed Nvidia in 2026, with gains of 121% and 67% respectively. Both companies benefit from massive AI infrastructure investments. Lumentum's optical components enable high-speed data center connectivity, with revenue up 72% year-over-year. Applied Materials supplies semiconductor manufacturing equipment with accelerating growth expected to continue, with earnings projected to jump 36% in the current quarter.

Hedge fund billionaire Daniel Loeb's Third Point LLC opened a new 50,000-share position in Broadcom during Q1 FY26, while reducing NVIDIA and Taiwan Semiconductor holdings. Broadcom beat earnings expectations with $19.31B in revenue and projects $22B for Q2, with AI chip revenue expected to exceed $100B in 2027. Multiple analysts raised price targets citing strong AI business momentum and secured supply chain through 2028.

The semiconductor sector is transitioning from an AI hype-driven rally to a sustainable growth story, with the AI market expected to grow from nearly $1 trillion in annual sales to $2 trillion by 2036. The VanEck Semiconductor ETF (SMH) is recommended as a way to gain exposure to industry leaders like Nvidia, TSMC, and Intel, which are positioned to drive future growth despite recent consolidation in non-megacap names.

Global semiconductor stocks retreated after Trump and Xi's summit failed to announce major chip agreements or breakthroughs on NVIDIA's China business. Key developments include Taiwan Semiconductor's $31.28B capital spending approval for AI chip manufacturing, Meta offering free WhatsApp access to competing AI developers to resolve EU antitrust concerns, Trump Mobile delivering delayed $499 smartphones, and the Elon Musk vs. OpenAI trial concluding with closing arguments. Notable earnings included strong results from Applied Materials, Cisco, and Tower Semiconductor, while Alibaba reported mixed results and Birkenstock faced margin pressures.

U.S. stock indexes declined at midday on May 15, 2026, as rising Treasury yields (near 4.6%), elevated crude oil prices (over $100/barrel), and inflation concerns reversed the previous day's gains. The S&P 500 fell 1.08%, Nasdaq dropped 1.36%, and the Dow declined 0.98%. AI and semiconductor stocks underperformed as investors shifted away from higher-risk assets.

US stocks fell sharply on Friday as the AI-driven rally loses momentum amid rising Treasury yields and inflation concerns tied to Middle East tensions. The Nasdaq futures dropped 1.55% while oil prices surged 3% on geopolitical risks. Chip stocks faced particular pressure after Trump-Xi talks failed to address semiconductor export controls, with markets now pricing in a 40% probability of a Fed rate hike by year-end.

U.S. stock futures fell on Friday following record moves on Thursday as investors weigh outcomes of President Trump's China visit. The Dow Jones, S&P 500, and Nasdaq 100 futures all declined. Key movers include Figma surging 10.92% on strong Q1 results, Applied Materials falling 3.08% despite beating expectations, Dlocal plunging 6.87% despite positive earnings and buyback announcement, and Winnebago Industries rising 0.53% on better-than-expected Q2 results.

Applied Materials reported strong Q2 results with revenue of $7.91B (beating estimates) and gross margins at 25-year highs driven by AI demand. The company issued bullish Q3 guidance of $8.95B revenue and raised full-year semiconductor equipment growth outlook to over 30%. However, shares fell 2.82% in premarket trading Friday as investors engaged in profit-taking despite the positive results.

U.S. stock futures rose on Thursday as President Trump addresses trade issues with China. Cisco Systems surged 18.8% on better-than-expected Q3 results and raised FY26 guidance. Doximity plunged 21.46% on mixed Q4 results and weak guidance. Grocery Outlet gained 16.41% after beating EPS estimates by 150%. The Fed is expected to hold rates steady in June with 98.6% probability. Nvidia's H200 chip sales to Chinese firms were cleared by the U.S., though Beijing halted deliveries.

The S&P 500 climbed to a record high on Wednesday, rising 0.58% to 7,444.25, driven by semiconductor and AI-linked stocks despite hotter-than-expected inflation data. The May 14 Polymarket contract implies a 77% probability of the index opening higher on Thursday. Tech stocks, particularly semiconductors, continue to outperform amid AI demand optimism, though the rally remains narrow with two-thirds of S&P 500 stocks finishing lower.

U.S. equities fell sharply on May 12, 2026, after April's CPI came in hotter than expected at 3.8%, raising concerns the Federal Reserve will keep rates on hold throughout the year. The Nasdaq 100 sank 2.1% as the semiconductor sector collapsed, with memory chip stocks hit particularly hard by South Korea's proposed 'AI Citizen Dividend.' Notable gainers included Zebra Technologies (+18%) and Wendy's (+15%), while ZoomInfo plummeted 33% on slashed guidance.

Applied Materials is recommended as a buy ahead of its Q2 earnings on Thursday, driven by strong demand for semiconductor equipment in AI infrastructure with all 23 recent analyst revisions to the upside. Alibaba is recommended as a sell due to margin pressures, slower growth, and competitive headwinds in China's e-commerce market, with 13 of the last 14 analyst revisions to the downside.