Wall St Futures Rise as Chipmakers Advance at End of Choppy Week

Wall Street futures rose sharply on Friday, January 16, as chipmakers continued to gain traction amid a volatile week. The surge was fueled by strong performance from key semiconductor firms and growing optimism around AI-driven demand. Equity futures for the S&P 500 and Nasdaq were up by 0.5% and over 1%, respectively.

The semiconductor industry is on track to generate more than $1 trillion in revenue in 2026, a historic milestone driven by AI-related demand. Memory and logic ICs are leading this growth, with Computing & Data Storage expected to grow by 41.4% year-over-year. The shift in capital spending toward AI infrastructure and model development is a key factor.

AI photography, next-generation smartphones, and wearables are also contributing to revenue gains in 2026, supported by rising memory pricing and product launches from Apple and Samsung. These trends are expected to sustain strong growth for semiconductors in the year ahead.

Why Did This Happen?

The surge in demand for AI-related hardware is reshaping the semiconductor landscape. Inference workloads, in particular, are expected to account for two-thirds of AI compute demand by 2026, up from one-third in 2023. This shift underscores the long-term demand for GPUs, memory chips, and other power-efficient components.

Taiwan Semiconductor Manufacturing Company (TSMC) reported a 35% year-over-year increase in profits, driven by strong AI chip demand. The company also raised its revenue guidance for the current quarter. This performance signals sustained growth in the sector.

How Did Markets React?

The SPDR S&P 500 ETF (SPY) and Vanguard S&P 500 ETF (VOO) both saw gains after several days of declines. The Nasdaq, in particular, outperformed as tech stocks rallied on AI-driven optimism. TSMC stock opened nearly 5% higher following its strong earnings report.

BlackRock also reported better-than-expected earnings, with shares rising over 4% in early trading. The asset manager's performance added to the broader market's positive momentum. Meanwhile, investment banks Goldman Sachs and Morgan Stanley also reported strong earnings.

What Are Analysts Watching Next?

Analysts remain bullish on AI-related stocks, with RBC and Rothschild Redburn upgrading their ratings on Nvidia. The firm cited a $500 billion backlog, strong inference demand, and growing enterprise adoption as key drivers. TSMC is also expected to maintain its strong performance through 2026, supported by its 2nm capacity expansion and advanced packaging technology.

JPMorgan analysts, however, have expressed skepticism about near-term rate cuts by the Federal Reserve. They expect the key rate to remain in the 3.5–3.75% range for most of 2026. The bank highlighted a tightening labor market and gradual inflation decline as factors that could delay easing.

President Donald Trump has pushed for the Fed to cut rates, citing recent inflation data that showed consumer prices rising by 2.7% year-over-year. The Fed has not yet signaled an imminent rate cut, with John Williams of the New York Fed indicating no urgency for immediate action.

Investors are closely monitoring the next Federal Reserve meeting, scheduled for late January. A decision to hold rates could reinforce market optimism around AI-driven growth and risk assets. JPMorgan and other analysts remain cautious, noting that a rate cut would depend on further economic signals.