AI chipmakers Nvidia (NVDA) and Advanced Micro Devices (AMD) led the tech stock rally Thursday following the Federal Reserve’s sizable 50 basis point interest rate cut. Nvidia stock jumped more than 5%, while its rival Advanced Micro Devices saw shares rise as much as 7% in afternoon trading, before edging down slightly to close the day.

The rising stock prices illustrate that investors are absorbing — and believing — Fed Chair Jerome Powell’s message that the US economy is “in good shape.” The tech-heavy Nasdaq (^IXIC) led the stock market’s upward trajectory. The index rose 2.5%, while the S&P 500 (^GSPC) rose 1.7% and the Dow (^DJI) climbed 1.3%.

The so-called Magnificent Seven Big Tech stocks all posted gains. Meta (META) stock rose 4%; Apple (AAPL) jumped 3.7%. Amazon (AMZN), Google (GOOG), and Microsoft (MSFT) all bumped up nearly 2%. But the semiconductor subsector of the tech industry was a top gainer. The PHLX Semiconductor Sector Index (SOX) climbed nearly 5%.

Nvidia’s climb is welcome news to investors who watched the stock’s roller-coaster ride in recent weeks. The chipmaker's shares fell after the company reported its fiscal second quarter earnings at the end of August, beating Wall Street’s expectations but lowering its projected gross margin for the full year.

The stock tumbled further upon news that the Department of Justice sent subpoenas to Nvidia as the agency ramped up its antitrust investigation of the company. But it jumped again after CEO Jensen Huang successfully pitched investors on AI’s return on investment during a Goldman Sachs conference last week, and big names like Oracle chief technology officer Larry Ellison and Elon Musk have reportedly “begged” for more Nvidia AI chips.

And while Nvidia’s stock price may be down about 12% from three months ago, it’s up a staggering 172% from this time last year. The semiconductor superpower has continued to benefit from the AI boom, which is proving to be more than just hype.

Although Nvidia dominates the market for AI hardware, AMD is also a major beneficiary of the AI innovation wave. While the stock has faced ups and downs throughout the last year and has come down from record highs in March, shares are up nearly 55% from last year.

AMD in late June posted second quarter profits up nearly 20% from the prior year. The company will report third quarter results in late October.

The semiconductor sector’s good day is a bright spot as it faces uncertainty with the US presidential election inching closer. Both presidential candidates’ tough-on-China stances would be bad news for American chip companies like Nvidia. The Biden administration implemented tough export controls banning Chinese companies from directly buying chips from Nvidia and AMD in 2022.