Monty Rakusen
Semiconductor stocks rose sharply on Wednesday, driven in part by gains in Nvidia (NASDAQ:NVDA) and AMD (AMD), while the sector awaited the quarterly results of industry giants Qualcomm (NASDAQ:QCOM) and Arm Holdings (NASDAQ:ARM).
Nvidia shares rose more than 11.5% after morgan Stanley added again The semiconductor giant added it to its list of top picks following the recent sell-off.
Nvidia shares have sold off for several reasons, analyst Joseph Moore said, including: customer capital spending budgets and customer ROI; competitive dynamics; export controls; supply chain concerns; macroeconomic concerns and market valuation compression.
“Despite those concerns, the earnings environment is likely to remain strong, for NVIDIA and the entire ai complex,” Moore wrote in a note to investors. “Visibility will actually increase as demand shifts from Hopper to Blackwell as the squeeze shifts back to silicon — H100 lead times are short, but H200 lead times are already long, and Blackwell should be even longer.” Moore didn’t change his Overweight rating and $144 price target for Nvidia.
Additionally, the U.S. government is reported to be exempting allies that export vital chipmaking parts, including Japan, the Netherlands and South Korea, from an upcoming expansion of export controls, reducing the impact of the rule.
Nvidia is reportedly working on a new artificial intelligence chip for the Chinese market.
Chip equipment manufacturers including ASML (NASDAQ:ASML), La Research (LRCX), Applied Materials (AMAT) and KLA Corp. (KLAC) rose after the report, which may have spurred optimism across the sector.
Lam Research increased by more than 5% ahead of the release of its quarterly results. A consensus of analysts expects the company to earn $7.59 per share on $3.83 billion in revenue.
AMD (AMD) Stock rose by 4.5% After the company led by Dr. Lisa Su reported better-than-expected second-quarter results and guidance, analysts said they were unsure of the company's future.
“On the positive side, client and server CPUs look solid, and the modest increase in ai guidance appears to have been sufficient in the face of seemingly lower expectations given recent stock performance,” Bernstein Société Générale Group analysts led by Stacy Rasgon said in a note. “However, we are starting to get a bit concerned about the state of the PC CPU pipeline (with over-manufacturing in recent quarters and results/forecasts suggesting this trend could continue).”
Qualcomm (QCOM) shares gained more than 5% ahead of its own quarterly results, which will be released after the close of trading. A consensus of analysts expects the company to earn $2.26 per share on $9.22 billion during its fiscal third quarter.
Investors too bid up Arm Holdings ahead of its own quarterly report. A consensus of analysts expects the British chip design firm to earn $0.35 per share on $906.5 million for its fiscal first quarter.
Most other semiconductor stocks in the S&P 500 rose on Wednesday, including Broadcom (AVGO) and Micron (MU), which gained 7% or moreAnalog vendors such as Texas Instruments (TXN), NXP Semiconductors (NXPI) and Analog Devices saw more modest gains.
Intel (INTC) rose by 1.5% after it was reported last night that the company could cut thousands of jobs as it looks to save costs.
Bucking the trend were Qorvo (QRVO) and Skyworks Solutions (SWKS), which They fell by 4.7% and 6.3%respectively, after both reported their own quarterly results on Tuesday.
