TMTPOST--Chip stocks surged on Wednesday as investors grew more confident that major companies would continue to invest heavily in the technical infrastructure supporting artificial intelligence.

Nvidia closed 13% higher, adding $329 billion to its market value in one day. Britain-based chip designer Arm gained over 8% ahead of its earnings announcement after the market close. AMD, which reported strong demand for its AI chips on Tuesday evening, rose 4%.

The tech-heavy Nasdaq Composite gained more than 3% at one point, but settled to close 2.6% higher.

Shares of Nvidia, Arm, and AMD had plummeted on Tuesday amid concerns about the sustainability of the previous year’s significant AI rally, reflecting investor sensitivity to the spending plans of key Big Tech firms.

Worries about the AI-related rally intensified last week following Google’s quarterly report, leading to a tumultuous period for technology investors that saw Nvidia’s value drop by nearly $500 billion in just over a week.

Wednesday’s recovery was initially driven by comments from Microsoft on Tuesday evening, indicating it would continue substantial investments in AI.

Microsoft was the only one of the so-called Magnificent Seven megacap tech stocks to close 1% lower on Wednesday. The Seattle-based company narrowly missed high expectations for cloud growth in its Tuesday earnings report. Despite this, executives’ warnings that demand for its AI services continued to exceed available supply of computing power boosted market sentiment around semiconductor suppliers.

Microsoft reported that sales in its closely watched Azure cloud computing platform rose 29% year on year in the quarter to June 30, missing forecasts of a 30-31% increase and below the previous quarter’s growth rate of 31%.

Microsoft’s capital expenditures for the quarter ending June 30 reached $19 billion, nearly 80% higher than the same period a year ago and exceeding Wall Street’s forecasts.