Key Highlights

  • AMD finished among the top gainers in both the Nasdaq-100 and the S&P 500 on Friday, opening sharply higher and holding its gains through the close amid a sweeping semiconductor rally.
  • Separate commentary pointed to AMD's data-centre momentum, including its Helios rack-scale AI platform and an $8.2 billion all-stock Acquisition of World Labs, though the timing of that deal was not confirmed as Friday.
  • Hewlett Packard Enterprise booked a $1.2 billion order from cloud provider Vultr for AI racks built on AMD chips and Juniper networking switches, announced September 30, with HPE shares also surging Friday.
  • The Nasdaq-100 closed at a record 30,807.93, though Treasury yields reversed to close higher and only a small minority of S&P 500 stocks traded above their 50-day moving averages.

Advanced Micro Devices (NASDAQ:AMD) shares jumped on Friday, October 2, as chipmakers rallied across the board after a weak jobs report reduced the odds of another Federal Reserve rate hike. AMD, which designs processors and graphics chips for PCs, gaming consoles and data centres, finished among the top gainers in both the Nasdaq-100 and the S&P 500. The stock opened sharply higher and held its gains through the close.

A Chip Rally With Many Winners

AMD was part of a sweeping rally in semiconductor stocks. Teradyne topped the S&P 500, while Arm Holdings, Monolithic Power, Microchip Technology, Texas Instruments, KLA and Intel all jumped. Nvidia, AMD's main rival in AI accelerators, hit a record high during the session after Morgan Stanley named it its top semiconductor pick.

Market commentary listed AMD alongside Analog Devices, KLA, Lam Research and Marvell Technology as chip stocks lifted by lower rate-hike odds.

AMD's Own Story

Separate commentary pointed to AMD's data-centre momentum, including its Helios rack-scale AI platform. It also cited AMD's $8.2 billion all-stock acquisition of World Labs, although the timing of that announcement was not confirmed as Friday.

AMD's hardware also featured in one of the week's big AI orders. Hewlett Packard Enterprise booked a $1.2 billion order from cloud provider Vultr for AI racks built on AMD chips and Juniper networking switches, announced on September 30. HPE shares surged on Friday as well.

Orders like that underline AMD's push into AI data centres, a market led by Nvidia.

The Macro Spark

The trigger for the chip rally came at 8:30 a.m. Eastern. The Bureau of Labor Statistics said the economy added just 29,000 jobs in September, far short of the roughly 84,000 forecasters expected. Revisions knocked 60,000 jobs off July and August, the Unemployment rate ticked up, and wage growth slowed.

The Federal Reserve, led by Chair Kevin Warsh, raised rates on September 16, its first hike since 2023, as the war with Iran drove oil prices and Inflation higher. After Friday's report, the odds of another hike at the October 27-28 meeting tumbled.

Capital.com analyst Kyle Rodda said the odds of a Fed hike this month have receded, though he added that further hikes are considered a matter of when and not if.

Lower rate expectations tend to favour Growth Stocks such as chipmakers, whose valuations depend heavily on future earnings.

Records, With a Caveat

The Nasdaq-100 closed at a record 30,807.93, up 306.37 points, and the S&P 500 rose 56.27 points to 7,722.72. Information technology was the second-best sector.

Yet Treasury yields reversed course after an early drop and closed higher, with the 10-year near its highest level since 2002. Breadth was also narrow, with only a small minority of S&P 500 stocks trading above their 50-day moving averages.

Watching AMD's Data-Center Roadmap

The Federal Reserve's October 27-28 meeting is the next big test for chip stocks. Investors will also look for more detail on AMD's data-centre roadmap, including Helios, and for further AI rack orders like Vultr's. In the chip sector, ASML reports third-quarter results in mid-October. The broader Earnings season kicks off with PepsiCo on October 8 and Delta on October 9, followed by the big banks on October 13 and 14. Analysts expect strong double-digit earnings growth for the S&P 500, with information technology among the leading sectors.