SAN FRANCISCO (Reuters) - As Qualcomm’s major victory against Apple sent semiconductor stocks to record highs on Wednesday, the sector’s strong recent rally may be at odds with uncertainty about an ongoing downturn in global demand.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 8, 2019. REUTERS/Brendan McDermid/File Photo

With the Philadelphia Semiconductor index jumping 1.4% on Wednesday to its second straight record high and now up 35% year to date, upcoming March-quarter reports could become a make-or-break moment for investors.

“People in the industry we speak to seem incredulous at the stock prices but are obviously more than willing to accept the benefit. Very simply, business is not as good as the stocks would imply and we would challenge someone to suggest their business has improved as much as their stock has,” Semiconductors Advisors wrote in a client note.

Announced on Tuesday, Apple’s surprise settlement with Qualcomm calls for its iPhones to once again use Qualcomm’s modem chips. As a result, Qualcomm’s stock has seen its strongest two-day gain since 1999, up 35% and adding $26 billion to the chipmaker’s market capitalization.

“The resolution caps a multi-year period in which (Qualcomm’s) stock has broadly been viewed as virtually uninvestible, and the resolution will likely go a long way toward assuaging investors who have been terrified of the potential for negative legal and regulatory outcomes,” Bernstein analyst Stacy Rasgon wrote in report.

Intel surged 3.6% to a record high after it said hours after the Apple settlement was announced that it would stop making modem chips, an unprofitable business that some investors believe the company is better off without.

Despite Tuesday’s seismic shift for the two California semiconductor makers, uncertainly blankets the global industry, with chipmakers yet to reach consensus that a downturn that started last year has touched bottom and little agreement about when and how strongly a recovery will occur.

That uncertainty will increase the focus on Texas Instruments Inc when it kicks off March-quarter reports for major U.S. chipmakers on April 23. Analysts on average expect an 8% drop in revenue for Texas Instruments’ first quarter and a 5% drop for 2019, although bullish investors argue that industry estimates could rapidly rise as strong signs of a recovery emerge.

Intel reports on April 25, with analysts calling for a 0.3% revenue dip in the first quarter and a 3.7 percent slide in non-GAAP net income to $4.02 billion. Qualcomm reports on May 1.