Shares in semiconductor firms Arm Holdings and Marvell Technology posted sharp gains on Friday, leading a broad tech rally that lifted markets on both sides of the Atlantic. Arm, the Cambridge-based chip designer, closed up 8.2% in New York trading, adding roughly £12.4bn to its market capitalisation. Marvell Technology, a US rival with strong exposure to data centre chips, rose 6.5%, pushing its valuation above £48bn.
The moves came as investors rotated back into growth stocks following softer-than-expected US inflation data released on Thursday. The personal consumption expenditures (PCE) price index, the Federal Reserve's preferred measure, rose just 0.2% month-on-month, reinforcing bets that interest rate cuts may come sooner than previously thought. Lower rates typically benefit high-valuation tech companies by reducing the discount on future earnings.
In London, the FTSE 100 edged up 0.6% to close at 7,642.34, with technology and mining stocks providing the biggest lift. The FTSE 250, which is more domestically focused, added 0.4%. Analysts at Citi noted that the rally was 'narrowly led' by semiconductor names, but cautioned that broader market gains depend on sustained earnings growth in the sector.
For UK investors and pension holders, the performance of Arm is particularly relevant. Arm is listed on the Nasdaq but derives a significant portion of its revenue from licensing its chip architecture to UK and European clients. Many UK pension funds hold US tech exposure indirectly through tracker funds. 'A sustained rally in Arm and Marvell signals confidence in AI infrastructure spending, which could spill over to UK-listed tech firms like Sage Group and even support the wider market,' said Sophie Ellis, market strategist at Hargreaves Lansdown.
The rally also lifted the Philadelphia Semiconductor Index by 2.1%, its best single-day gain in three weeks. However, some analysts warned that valuations remain stretched. 'Chip stocks are pricing in perfection. Any disappointment in AI-related earnings in the coming quarters could trigger a sharp reversal,' cautioned Michael Brown, senior analyst at Peel Hunt. Source: Market data from Reuters and Bloomberg.