Key Highlights

● Arm rose alongside Micron, AMD and Marvell.

● The rally was sparked by SK hynix's record results.

● Arm licenses processor designs rather than manufacturing chips.

● Nvidia was a notable exception, slipping during the session.

Arm Holdings shares rose on Wednesday, October 28, as a semiconductor rally sparked by blowout results from South Korea's SK hynix swept through the sector.

Arm Holdings (NASDAQ:ARM) climbed during Wednesday's regular session, riding a broad advance in semiconductor stocks that pushed the Nasdaq-100 higher. The chip designer joined Micron (NASDAQ:MU), AMD (NASDAQ:AMD) and Marvell (NASDAQ:MRVL) among the day's gainers as investors piled back into the AI hardware trade, according to a closing recap.

The SK Hynix Spark

No company-specific news from Arm was cited as a driver of the move. Instead, the stock appeared to rise with its sector, which was lifted by striking results from one of the world's largest memory makers.

SK hynix (NASDAQ:SKHY) reported a more than sevenfold jump in profit, posted its first quarter with revenue above 100 trillion won and said it expects the memory shortage to last into 2030. It also announced a shareholder return plan of about 100 trillion won. Its US-listed shares soared, and South Korea's KOSPI index surged.

Where Arm Fits

Those results reinforced the view that demand for chips used in AI data centers remains intense. Memory stocks led the charge, with Micron, Sandisk (NASDAQ:SNDK) and Seagate (NASDAQ:STX) all climbing. Equipment makers Lam Research (NASDAQ:LRCX) and Applied Materials (NASDAQ:AMAT) rallied as well, and the Philadelphia Semiconductor Index rose for a fourth straight session to close at 11,684.00.

Arm does not make chips. It designs processor architectures and licenses them to companies such as Apple (NASDAQ:AAPL), Qualcomm and Nvidia (NASDAQ:NVDA), collecting upfront license fees and royalties on each chip shipped. Its designs power nearly every smartphone and are increasingly used in data-center processors built by cloud giants.

Not Every Chip Stock Joined In

That gives Arm exposure to the AI build-out from a different angle than memory makers. As cloud companies design their own Arm-based server chips, Arm can earn royalties on a growing share of data-center hardware.

Nvidia was a notable exception, slipping during the session and lagging the rally. After the close, sentiment cooled further when Alphabet (NASDAQ:GOOGL) slid sharply in extended trading after missing estimates and reporting negative free cash flow. Microsoft (NASDAQ:MSFT), by contrast, rose after the close as its Azure cloud business accelerated.

What to Watch

The Nasdaq-100 closed at 29,813.16, up 161.72 points, outpacing the broader market. The S&P 500 added 21.38 points to 7,743.98 for a third straight gain. The Federal Reserve left its benchmark rate range unchanged in a 10-2 vote, and long-dated Treasury yields climbed.

The chip rally faces a test at Thursday's open, after Alphabet's miss weighed on futures. Amazon (NASDAQ:AMZN), a major designer of Arm-based server chips, reports after the close, and Apple, one of Arm's best-known licensees, reports later this week along with Meta (NASDAQ:META).