Written and reviewed by Kevin Nerway · Last verified 22 April 2026
Key Takeaways
- Semiconductor Dominance: Chipmakers like Intel (up 36% in 3 months) and Nvidia (up 12% in 3 months) are leading a massive hardware rally, while software firms struggle due to AI disruption fears.
- Intel's Historic Surge: Intel is experiencing its strongest monthly performance since 1974, gaining 50% so far in April following new contract announcements with Elon Musk’s Terafab project.
- Strategic Partnerships: Broadcom and Meta Platforms have entered a three-year partnership to develop custom AI training and inference chips (MTIA), signaling a shift toward specialized hardware.
- Divergent Tech Performance: A historic performance gap has emerged between hardware and software, with the latter facing valuation risks due to high multiples and upcoming economic catalysts.
Hardware vs. Software: A Historic Divergence in Technology
As the first-quarter earnings season for 2026 commences, a stark contrast has emerged within the technology sector. According to David Russell at TradeStation, semiconductor and IT hardware stocks have moved explosively higher since late March. This rally is driven by a combination of product wins, new contracts, and a general optimism regarding the stabilization of geopolitical tensions in the Middle East.
While hardware providers flourish, software companies have largely struggled. Investors remain concerned that AI advancements may disrupt traditional software business models. This has led to a significant performance gap, as hardware remains the essential foundation for AI scaling. Traders using professional-grade market research have noted that software firms typically trade at higher valuation multiples, making them more sensitive to the current high-interest-rate environment.
Intel Leads Chip Sector with Record-Breaking April Performance
Intel (INTC) has become the standout performer of the month, posting a 50% gain so far in April-its best monthly showing in over five decades. The rally was ignited by the announcement that Intel would design and package chips for Elon Musk’s Terafab project. Furthermore, reports suggest that the company may provide manufacturing services for other tech giants like Amazon and Alphabet.
Analysts at BNP Paribas recently upgraded Intel from 'underperform' to 'neutral,' raising their price target from $34 to $60. This optimism is fueled by the company’s 14A manufacturing program and the rising demand for CPUs capable of handling agentic AI tasks. For those participating in a two-step challenge, such high-velocity moves in mega-cap stocks provide significant opportunities for volatility-based strategies.
Market Impact Snapshot
| Asset | Direction | Confidence |
|---|---|---|
| Semiconductor Stocks (SOX) | Bullish | High |
| Software Sector | Bearish | Medium |
| Nasdaq 100 | Bullish | High |
| S&P 500 | Bullish | Medium |
Big Tech Earnings Calendar and Options Volatility
The upcoming week is critical for the broader markets, with several "Magnificent Seven" companies scheduled to report. Options activity remains high, with Tesla (TSLA) seeing average monthly volumes of 3.1 million contracts and Nvidia (NVDA) at 2.6 million.
| Company | Earnings Date | 3-Month Change |
|---|---|---|
| Tesla (TSLA) | 4/22 | -7.8% |
| Intel (INTC) | 4/23 | +36% |
| Microsoft (MSFT) | 4/29 | -6.7% |
| Meta (META) | 4/29 | +11% |
| Nvidia (NVDA) | 5/20 | +12% |
Traders should compare prop firm challenge fees before entering these volatile periods, as the cost of capital and drawdown limits will be tested by these high-impact releases. Microsoft and Palantir have notably struggled over the last three months, declining 6.7% and 13% respectively, contrasting sharply with the 23% gains seen in Micron Technology (MU) and AMD.
Strategic Partnerships and Analyst Upgrades Fuel Growth
The hardware rally is being supported by long-term strategic alliances. Broadcom (AVGO) recently announced a three-year partnership with Meta Platforms to develop Meta Training and Inference Accelerator (MTIA) chips. This move highlights the trend of big tech firms moving toward custom silicon solutions. KeyBanc analysts have expressed favor for Intel, Micron, and Nvidia, citing tight inventories and the potential for higher prices in a rising shipment cycle.
For traders looking to capitalize on these trends, understanding how traders perform in volatile conditions is essential. High-growth hardware stocks often experience rapid scaling during earnings beats, but the upcoming Federal Reserve meeting on April 29 adds a layer of macro risk that could impact the entire tech sector simultaneously.
Trading Implications for Funded Traders
With the Nasdaq 100 heavily weighted toward these names, prop traders must manage their max daily drawdown carefully. The divergence between hardware and software means that a long-only tech strategy may not be as effective as a pair-trading approach or a sector-specific focus on semiconductors.
Traders should use prop trading calculators to determine appropriate position sizing ahead of the April 29 earnings cluster, which includes Amazon, Alphabet, Meta, and Microsoft all reporting on the same day. Given the explosive move in Intel, the market may have already priced in significant good news, increasing the risk of a "sell the news" event if guidance does not exceed the already high expectations. Ensure you are aware of challenge rule differences regarding news trading before holding positions through these major releases.
Frequently Asked Questions
Why are semiconductor stocks outperforming software companies?
Hardware and chip stocks are benefiting from the physical infrastructure demands of AI, while software companies face concerns that AI might disrupt their existing business models. Additionally, software firms often trade at higher valuation multiples, making them more vulnerable to economic data shifts.
What triggered the 50% rally in Intel shares this April?
Intel's rally was driven by a major contract to design and fabricate chips for Elon Musk's Terafab project. Sentiment was further bolstered by reports of potential service agreements with Amazon and Alphabet, alongside an analyst upgrade from BNP Paribas.
Which companies are reporting earnings on April 29?
April 29 is a massive day for tech earnings, with Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), and Microsoft (MSFT) all scheduled to release their first-quarter results after the closing bell.
How should traders prepare for the Federal Reserve meeting on April 29?
With the Fed meeting coinciding with major tech earnings, traders should expect extreme volatility. It is advisable to review daily loss limit policies and consider reducing exposure to high-multiple growth stocks that are most sensitive to interest rate guidance.