The PHLX semiconductor index gained 1.6% on Tuesday, with strength concentrated in major CPU designers and a parallel surge in optical-technology suppliers.
Among large-cap names, Intel led the advance with a 9.8% jump in its share price, while Advanced Micro Devices climbed 6.6%. U.S.-listed shares of ARM Holdings added 4.7%.
Citi published a bullish assessment of the chip sector ahead of its 2026 Global TMT conference, which began Tuesday. In the note, the brokerage raised its projection for the total addressable market for central processing units to $237 billion by 2030 - a figure Citi says implies a 52% compound annual growth rate from $29 billion in 2025.
That $237 billion projection exceeds the market-size estimates referenced by several industry participants: $100 billion from AMD, $220 billion from ARM Holdings and $200 billion from Nvidia, according to the Citi report.
Citi said it is "more constructive on the innovation" in the server CPU space and expects "AMD to be the key beneficiary of the CPU renaissance and Intel as a secondary beneficiary."
The rally in semiconductors was not confined to CPUs. Optical-technology stocks also advanced: Coherent rose 8.8%, Lumentum surged 12.6% and Applied Optoelectronics gained approximately 8%.
Market participants reacted to Citi's updated outlook and the commentary on where innovation-related gains may accrue within the CPU market. The brokerage's estimates and its view on beneficiaries were central to the moves in individual stocks and to the broader sector lift recorded on Tuesday.
While the day’s action reflected a combination of analyst optimism and stock-specific flows, the market now carries Citi's larger CPU market projection as a point of reference for investor expectations as the Global TMT conference unfolds.