Chip stocks hit record high

Semiconductor stocks hit record levels on Wednesday, after better-than-expected second-quarter results from Texas Instruments Inc. boosted optimism despite a global slump in chip sales.

The Philadelphia Semiconductor Index gained as much as 2.2% in its third straight positive session, aided by a 8% surge in TI, which hit records of its own.

The sector was broadly higher, with almost every component of the index advancing. Among the industry’s other notable gainers, Teradyne Inc. spiked 14% after a strong sales forecast, while Micron Technology Inc. and Western Digital Corp. rose after Deutsche Bank raised its price targets on the pair.

Chipmakers have been on a roller coaster ride in 2019 as investors have grappled with a trade war between the U.S. and China and lower sales. The chip benchmark suffered its worst month in more than a decade in May after a trade deal between the world’s two largest economies fell apart.

Texas Instruments cited “broad-based weakness” and said that the end markets it supplies performed as expected. Asked on the earnings call about demand in China, Chief Executive Officer Rich Templeton said he saw “nothing unusual.” The Dallas-based company forecast third-quarter revenue that, at the midpoint, trailed the average analyst estimate.

Semiconductor companies’ earnings and forecasts are often seen as a leading indicator of global economic growth because of the months it takes to manufacture the components and then build them into finished electronic devices. May marked the fifth consecutive month of chip sales declines, according to the Semiconductor Industry Association.

Now read: Apple suppliers see iPhone demand stabilising

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Chip stocks hit record high