Chipmakers head for big profit gains, but will it be enough?

Chipmakers have long been considered cyclical companies whose rise and fall depend in large part on activity elsewhere in the global economy. The rise of AI has intensified that relationship.

One reason for optimism may be that it is more than just data center exposure that is boosting demand, said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta, citing industrial electronics, wireless communications and cars. "You're seeing a broadening out," he said.

"The only place where I still see continued weakness is in the chips that go into handsets," he said, noting that Qualcomm is among those chipmakers.

Market watchers in part pin the volatility on the SOX and its constituents becoming retail favorites and fueling the rise of leveraged exchange-traded funds. Leveraged ETFs amplify market volatility by creating additional demand for shares when they rise and prompting more selling when they fall.