Nvidia, AMD help power chip surge as sector awaits Qualcomm, Arm results

Semiconductor stocks were sharply higher on Wednesday, boosted in part by gains in Nvidia (NASDAQ:NVDA) and AMD (AMD), as the sector awaited quarterly results from industry giants Qualcomm (NASDAQ:QCOM) and Arm Holdings (NASDAQ:ARM).

Nvidia shares jumped more than 11.5% after Morgan Stanley re-added the semiconductor giant to its top picks list after the recent sell-off.

Nvidia shares have sold off for several reasons, analyst Joseph Moore said, including: customer capital spending budgets and customer ROIs; competitive dynamics; export controls; supply chain concerns; and macro concerns, and market valuation compression.

“Through those concerns, the earnings environment is likely to remain strong, for NVIDIA and for the whole AI complex,” Moore wrote in an investor note. “Visibility will actually increase as demand moves from Hopper to Blackwell, as the constraint will shift back to silicon; H100 lead times are short, but H200 lead times are already long, and Blackwell should be even longer.” Moore made no change to his Overweight rating and $144 price target on Nvidia.

Additionally, it was reported that the U.S. government may exempt allies that export vital chip making parts — including Japan, the Netherlands and South Korea — from an upcoming export control expansion, reducing the impact of the rule.

Nvidia is reportedly working on a new artificial chip for the Chinese market.

Chip equipment makers, including ASML (NASDAQ:ASML), La Research (LRCX), Applied Materials (AMAT) and KLA Corp. (KLAC), rose on the back of the report, which may have spurred optimism across the entire sector.

Lam Research rose more than 5% ahead of the release of its quarterly results. A consensus of analysts expect the company to earn $7.59 per share on $3.83B in revenue.

AMD (AMD) shares rose 4.5% after the Dr. Lisa Su-led company reported better-than-expected second quarter results and guidance. However, analysts said they were unsure where the company goes from here.

“On the positive, client and server CPU seems solid, and the modest raise to AI guidance appears to have been enough in the face of seemingly lowered expectations given the recent stock performance,” said Bernstein Société Générale Group analysts, led by Stacy Rasgon, in a note. “However, we are starting to worry a bit about the state of the PC CPU channel (with overbuild in recent quarters and results/guidance suggestive that this trend could potentially be continuing).”

Qualcomm (QCOM) shares gained more than 5% ahead of its own quarterly results, slated to be released after the close of trading. A consensus of analysts expect the company to earn $2.26 per share on $9.22B during its fiscal third quarter.

Investors also bid up Arm Holdings ahead of its own quarterly release. A consensus of analysts expect the British chip design firm to earn $0.35 per share on $906.5M during its fiscal first quarter.

Most other semiconductor stocks in the S&P 500 were higher on Wednesday, including Broadcom (AVGO) and Micron (MU), which gained 7% or more. Analog suppliers such as Texas Instruments (TXN), NXP Semiconductors (NXPI) and Analog Devices saw more modest gains.

Intel (INTC) rose 1.5% after it was reported last night that the company could cut thousands of jobs as it looks to save on costs.

Bucking the trend were Qorvo (QRVO) and Skyworks Solutions (SWKS), which fell 4.7% and 6.3%, respectively, after the pair released their own quarterly results on Tuesday.