:max_bytes(150000):strip_icc()/GettyImages-2155386076-a3fa5211a4dc40289f5c2d56c0593e08.jpg "Why Nvidia, AMD and other chip stocks are rising on Thursday")
The central theses
- Chip stocks rebounded Thursday from losses suffered earlier in the week on economic concerns and reports of delays in the launch of Nvidia’s new Blackwell chip.
- Thursday’s sharp rise came amid signs that economic concerns may have been overdone following the release of a better-than-expected weekly jobless report.
- Analysts expect Nvidia and other chip stocks to benefit from longer-term trends in artificial intelligence demand, and say recent volatility could provide investors with an opportunity to buy on dips.
Nvidia (NVDA), Advanced Micro Devices (AMD), Broadcom (AVGO) and other semiconductor stocks rose on Thursday, rebounding from losses earlier in the week sparked by concerns about the U.S. economy and reports of delays in the launch of Nvidia’s new Blackwell chip.
The iShares Semiconductor ETF (SOXX) gained over 6% on Thursday afternoon after falling nearly 3% on Wednesday. Chip stocks have fluctuated wildly in recent weeks, especially since a weaker-than-expected July jobs report sent markets into a tailspin last Friday.
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The surge in chip stocks on Thursday boosted gains in major indexes. The technology sector was the leading gainer in the S&P 500, which rose 2.3 percent. The tech-heavy Nasdaq rose 2.9 percent.
Are economic concerns exaggerated?
Thursday’s sharp rise came amid some signs that the concerns that sparked a global sell-off earlier in the week may have been overdone. Thursday’s jobless claims data showed fewer people applying for unemployment benefits than economists had expected.
Expectations for rate cuts by the Federal Reserve have eased somewhat. Markets are now pricing in a 55 percent chance that the central bank will cut rates by half a percentage point in September, according to CME Group’s FedWatch tool based on Fed Funds Futures data. Earlier this week, the probability was 99 percent, when speculation arose that the Fed could be pushed into an emergency cut.
Short-term volatility offers an opportunity to buy on price declines, according to analysts
With chip stocks expected to benefit from rising demand for artificial intelligence (AI) over the longer term, analysts say recent volatility could provide investors with an opportunity to buy dips in Nvidia and other chip stocks.
Responding to reports that Nvidia’s new Blackwell AI chip could face delays, analysts at Piper Sandler, Oppenheimer, Bank of America and Goldman Sachs indicated they expect little impact on the chipmaker’s long-term prospects, emphasizing Nvidia’s strengths in the AI space.
Nvidia told Investopedia on Tuesday that Blackwell production remains “on schedule” and could ramp up in the second half of the year.
Shares of Nvidia, Broadcom and AMD all rose more than 5% in recent trading.
