Nvidia and Intel lead the rally in semiconductor stocks

Pat Gelsinger, CEO of Intel Corporation, holds a semiconductor chip as he speaks during the Commerce, Science and Transportation Senate hearing entitled “Developing Next Generation Technology for Innovation” on Wednesday, March 23, 2022 at the Russell Senate Office Building says.

Tom Williams | CQ Roll Call, Inc. | Getty Images

Semiconductor stocks rose on Thursday as investors regained their appetite for riskier assets and bought into bullish comments from Nvidia and Intel this week.

Chip stocks have been beaten so far this year on inflation fears and concerns that Ukraine’s crisis will add to supply chain challenges. By the close on Wednesday, the iShares Semiconductor ETF in 2022 was down 15%, while the Nasdaq and S&P 500 were down 12% and 6.8%, respectively.

Nvidia led Thursday’s rally, up about 9%. Earlier this week, Nvidia said at its investor day that the company’s roadmap includes new server chips with a focus on artificial intelligence, as well as a plan to build the world’s fastest AI supercomputer.

Analysts liked what they heard.

“Basically, we continue to believe that Nvidia is uniquely positioned to capitalize on the growth of AI in hardware and potentially software,” Deutsche Bank’s Ross Seymore, who recommends holding the shares, wrote in a statement on Wednesday.

Intel jumped over 6% on Thursday for its biggest one-day gain in more than a year. CEO Pat Gelsinger was on Capitol Hill Wednesday to argue that government subsidies for domestic manufacturing could bolster U.S. national security and help address the current semiconductor shortage that is affecting the auto industry and other key sectors of the economy rebellion.

“Oil reserves have dominated geopolitics for the last five decades,” Gelsinger said in an interview on CNBC. “Where the fabs stand for a digital future is more important,” he added, referring to the semiconductor fabs.

Intel plans to spend at least $20 billion on a chip fab complex in Ohio and this month announced plans to spend $36 billion to build a new “mega-factory” in Germany and other European hubs.

“Let’s build them where we want them and define the world that we want to belong to in the US and Europe,” Gelsinger said.

The chip rally was helped by a Labor Department report showing that initial jobless claims fell to their lowest level since 1969 last week. Investors bought shares in companies poised to benefit from a recovery in the US economy.

AMD was up nearly 5% on Thursday, while Broadcom was up nearly 4% and Qualcomm was up 3%. They are all still down for the year.

CLOCK: Buy the dip and stick with Nvidia long, says Cramer

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