Thursday’s trading session saw a surge in semiconductor stocks, despite a dip in Nvidia Corp.’s (NVDA) shares. Nvidia’s earnings report was widely anticipated as a crucial indicator for the broader stock market in August, potentially driving a further rally or reversing the recent gains. However, the results fell short of expectations.
Nvidia’s shares failed to recover after a negative reaction in Wednesday’s after-hours trading. The company reported quarterly revenue of $30 billion, surpassing estimates of $28.86 billion, representing a 15% increase from the previous quarter and an impressive 122% year-over-year growth. Net income reached $16.6 billion, up 12% from the prior quarter and a significant 168% increase compared to the same period last year. Earnings per share came in at 68 cents, beating the expected 64 cents.
Despite exceeding Wall Street’s revenue and earnings projections, Nvidia’s outlook for the coming quarters failed to meet investors’ already high expectations. The company projected revenue of $32.5 billion, plus or minus 2%, for the current quarter, slightly above the estimated $31.9 billion, but not enough to excite the market.
Investors likely viewed Nvidia’s quarterly results as a standalone event, choosing to exercise caution as the company’s guidance did not significantly surpass expectations. Nevertheless, they maintained a generally positive sentiment toward the broader market. Competitors of the AI giant witnessed a significant rally, diverging from their usual trend of closely mirroring Nvidia’s performance.
“We believe Nvidia’s comments on Data Center demand were constructive,” said Toshiya Hari, an analyst at Goldman Sachs. The company’s outlook for data center demand bodes well for other semiconductor companies involved in the AI infrastructure build-out. Hari highlighted “ongoing tightness in High-Bandwidth Memory as a material positive for Buy-rated Micron Technology Inc. MU.”
Even exchange-traded funds (ETFs) with substantial Nvidia exposure experienced positive performance during Thursday’s trading session. Here are some noteworthy movers:
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Strive U.S. Semiconductor ETF (SHOC):
Up 0.7%, despite Nvidia comprising 30% of the fund.*
VanEck Semiconductor ETF (SMH):
Up 0.8% .*
VanEck Fabless Semiconductor ETF (SMHX):
Up 1.2%. This newly launched ETF focuses on companies specializing in chip design and development while outsourcing production.*
Invesco PHLX Semiconductor ETF (SOXQ):
Up 1.4%.*
First Trust Nasdaq Semiconductor ETF (FTXL):
Up 1.6%.*
iShares Semiconductor ETF (SOXX):
Up 1.7%.*
SPDR S&P Semiconductor ETF (XSD):
Up 2.7%.Here are Thursday’s top-performing semiconductor stocks:
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Arm Holdings plc (ARM):
Up 4.81%*
Intel Corporation (INTC):
Up 4.50%*
Marvell Technology, Inc. (MRVL):
Up 4.29%*
ON Semiconductor Corporation (ON):
Up 4.18%*
Qorvo, Inc. (QRVO):
Up 3.73%*
Teradyne, Inc. (TER):
Up 3.37%*
Onto Innovation Inc. (ONTO):
Up 3.06%*
Microchip Technology Incorporated (MCHP):
Up 2.98%*
Analog Devices, Inc. (ADI):
Up 2.82%*
Skyworks Solutions, Inc. (SWKS):
Up 2.80%Analysts remain optimistic about the semiconductor sector’s future, citing the growing demand for AI infrastructure as a key driver. Despite Nvidia’s disappointing guidance, the broader sector appears poised for continued growth.
