The iShares Semiconductor ETF (SOXX) surged 5.01% in pre-market trading on Tuesday, as a confluence of positive catalysts drove a broad rally across the chip sector.

Risk appetite was buoyed by hints from U.S. Treasury Secretary Bessent that a deal with Iran could be reached to reopen the Strait of Hormuz, sending oil prices sharply lower and easing geopolitical concerns. Additionally, blowout earnings from AI software firm Palantir and power chip maker ON Semiconductor fueled optimism around the artificial intelligence demand cycle. Palantir raised its full-year guidance after reporting a 94% revenue surge, while ON Semiconductor beat quarterly estimates and forecast further growth driven by AI data center demand.

Underpinning the sector strength, reports highlighted that TSMC’s 3nm production ramp is exceeding expectations, with major clients competing for capacity. Meanwhile, Alphabet’s $200 billion AI infrastructure financing project underscored the massive, sustained demand for advanced chips. The combination of easing macro concerns and robust AI-driven fundamentals propelled the semiconductor ETF sharply higher in the pre-market session.