Tech Rallying: Microsoft, Micron, SanDisk, NVIDIA, AMD All Up Big Today

What a difference a day can make! After tech markets had been sliding backward throughout earning season -- the Nasdaq had slid 6% since highs on October 5th -- stocks rebounded sharply today. The Nasdaq ended the day up 1.44%, outpacing the S&P 500's 1.09% gain.

What was leading the rally? Tech stocks held up nicely, with the S&P 500 Tech Index seeing a heady 1.8% gain. Let's take a look at some of the companies leading today's rally. 

Today's Big Winners

Notice a trend here? One obvious area is that four of the featured five companies have heavy PC exposure. That's not a story that's played out very well recently, with big PC players like Intel and Microsoft (MSFT -3.42%)  posting weaker-than-expected earnings. Not only that but, in researcher Gartner's third quarter numbers, PC sales were off 8% from the previous year. 

The fact Microsoft itself was up 3.4% today shows that this was an industry-wide rebound today. What's driving the PC optimism? A pair of bullish analyst notes on Microsoft today help explain the optimism. Across the earnings season, company after company in the PC chain cautioned that businesses were taking a wait-and-see approach to Windows 8. With that operating system having been hyped in the media as the savior of the PC, the slow start weighed on PC-related companies.

However, Microsoft's announcement on Tuesday of 4 million Windows 8 upgrades sold, and optimism around the company's Office 13, seem to have won the day today. Is the rally today warranted?

To answer that question, you have to, once again, look out over the past month. Over that time frame, every stock on the list was down heading into today's trading. Often, when the market hits a strong day-long rally, it's the most beaten-down stocks that see the biggest gains. Throw in the recent difficulty surrounding these stocks and Wall Street's positive PC chatter, and you can see the makings of why these stocks rallied today. 

That being said, it's helpful to remember that Microsoft's 4 million Windows 8 sales in its first four days were aided by aggressive upgrade incentives, and still lagged the 5 million iPhone 5s that Apple sold in the phone's opening weekend. 

Here's an interesting way of putting the PC's declining relevance into perspective: As AMD said in its most recent conference call, "The shift from desktop computing to mobile is happening faster than everyone expected." 

Not every company on the list is entirely reliant on the PC. Microsoft has done a great job growing its server division, SanDisk is big into mobile devices, and NVIDIA has pushed deep into the mobile processor space. 

However, each company has its own unique exposure to the PC market, as well. If you're an investor who doesn't understand how another 10% -- or 20% -- haircut in PC sales could affect the companies you own, it's an important area to consider. PC sales were off 8% across the globe last quarter, but they were off a whopping 14% in the United States. The reason for that difference is that emerging markets, like China, have continued buying the PC. However, even Intel began warning last quarter that PC sales into China were waning. At the same time, iOS and Android sales to China were exploding 400% year over year. 

The PC isn't dying, but it's fading away. It's time to prepare your portfolio accordingly. 

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