AI-driven market rally shifts from hyperscalers to chipmakers with strong earnings growth and broad recovery signs.

The AI trade in the market has evolved from focusing on hyperscalers to chipmakers, reflecting a shift in investment themes. The SOX index has seen a roughly 60% price gain this year, matched by similar earnings growth, with projections for an additional 75% growth next year. Nasdaq-100 companies show strong earnings breadth, with over half reporting 20%+ growth and Q2 earnings nearing an annualized 80%, the strongest since 2010. Despite record highs, large-cap valuations are compressing as forward earnings outpace price gains. The recovery extends beyond AI and chipmakers to mid and small-cap stocks, supported by expectations of rate cuts, cooling wages, and tax benefits.