The iShares Semiconductor ETF (SOXX) surged 5.03% in pre-market trading, driven by a powerful combination of easing geopolitical tensions and robust earnings reports from key AI-linked companies that renewed investor confidence in the semiconductor sector.

Risk appetite was significantly boosted by U.S. Treasury Secretary Bessent’s hints at a potential deal with Iran to reopen the Strait of Hormuz, which sent oil prices sharply lower and alleviated macro concerns. Concurrently, the sector was lifted by stellar financial results from AI software firm Palantir Technologies, which raised its full-year guidance after a 94% revenue surge, and power chip maker ON Semiconductor, which beat quarterly estimates and forecast further growth fueled by AI data center demand. These catalysts reinforced the narrative of sustained demand for advanced chips, propelling the semiconductor ETF higher.

Underpinning the sector's strength, reports highlighted that TSMC's 3nm production ramp is exceeding expectations, while industry giants like Alphabet are constructing massive $200 billion AI infrastructure financing projects, underscoring the massive, sustained demand for advanced chips. The combination of improving macro sentiment and strong AI-driven fundamentals fueled the broad-based rally in the semiconductor ETF.