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The Philadelphia semiconductor index hit its highest level in nearly a year on Thursday, as optimism grows that a sales downturn in the industry has reached its nadir, in part due to a surge in artificial intelligence (AI) technology.

The index climbed 1.6%, adding to a gain of more than 3% on Wednesday, and it is now on track for its biggest two-day percentage gain in nearly two months, hitting its highest level since April 6 after a flurry of updates from several chipmakers including Intel, Micron Technology and Germany’s Infineon.

Micron forecast a sharp drop in third-quarter revenue from the year-ago period on Tuesday, but CEO Sanjay Mehrotra said he was confident about the long-term and said the memory chip industry would see a record calendar year 2025 in terms of market size as AI will help boost sales.

“That was probably the best read in terms of what everyone is concerned about, which is, are we going into a significant recession?” said King Lip, chief investment strategist at BakerAvenue Wealth Management in San Francisco. “And from Micron’s read, we’re not.

On Wednesday, Infineon boosted its outlook for both its second quarter and full-year, crediting resilience in the auto and industrials divisions, while Intel said its previously delayed Sierra Forest semiconductor that focuses on power efficiency would be delivered in the first half of next year.

“There’s been a chip glut through the industry so production has been very low, prices have had to come down,” said Jeff Kleintop, chief global investment strategist at Charles Schwab in Celebration, Florida.

“Semiconductor businesses are very sensitive to the inventory cycle. And so if that’s beginning to turn, that’s really bullish for those companies.”

The semiconductor index is up nearly 27% this year, putting it on track for its biggest quarterly percentage gain since the second quarter of 2020.

Among semis this year, Nvidia has surged nearly 90% as the best performer on the S&P 500 to rank the company as the fifth-most valuable on the benchmark index. Smaller rival Advanced Micro Devices has jumped more than 50%.

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