On Thursday, shares of Nvidia Corp, Advanced Micro Devices, and Micron Technology offered the largest boosts to the semiconductor sector, which outperformed the overall market as investors sought ways to invest in artificial intelligence and Japan.
Synopsys shares rose 8.7% after the chip design software company anticipated higher-than-expected third-quarter profit forecasts, citing growing usage of AI and automation.
Nvidia’s stock rose 5.0%, while the Philadelphia semiconductor index rose 3.2%.
Micron’s stock rose 4.1% after the company announced plans to invest up to 500 billion yen ($3.70 billion) in extreme ultraviolet (EUV) technologies in Japan over the next four years, with Japanese government assistance.
Fumio Kishida, Japan’s president, has asked executives from companies such as Micron, Intel Corp, and Taiwan Semiconductor to invest in Japan ahead of a three-day Group of Seven (G7) summit in Hiroshima, where member countries will discuss what they see as China’s economically coercive policies and accumulation of sensitive technology.
Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh, attributed Thursday’s gain to sustained investor enthusiasm in the growth of artificial intelligence as the trendiest new technology, rather than Japan’s announcement.
“While it’s encouraging that companies and countries are working together to expand capacity, for investors when companies are building new plants, it’s generally not rewarding in the short term because that’s where all the free cash flow goes,” said Forrest.
However, the money manager, who cited Synopsys results as a positive indicator for the chip sector, observed that investors saw chips as the portion of the AI story they can invest in today because “there’s no one company you can buy that’s the lynchpin” for AI.
AMD’s stock rose 4.0%, while Intel’s rose 2.8%. Nvidia, which has gained 116% in 2023, is scheduled to release quarterly results on May 24.
Nvidia shares reached their greatest level since December 2021, while Micron shares reached their highest level since June 2022.
The S&P 500 technology index gained 2.1%, trailing the semiconductor sector, while the S&P 500 growth index gained 1.0%.
(Adapted from Nasdaq.com)