Semiconductor index surges with Nvidia leading race to AI "gold rush"

Vicor

25/05/2023 18:41

By Sinéad Carew and Stephen Nellis
       NEW YORK/SAN FRANCISCO, May 25 (Reuters) - The
Philadelphia semiconductor index  .SOX  hit its highest level in
more than a year on Friday and eyed its biggest one-day
percentage gain in six months with artificial intelligence (AI)
taking center stage after Nvidia Corp  NVDA.O  wowed investors
with financial targets that blew past analyst expectations.
    The semi index was last up 6.3% after hitting its highest
level since early April 2022 while chip designer Nvidia, its
biggest gainer by far, was up 26.7% and trading at record levels
with an intraday high of $394.80.  
     Nvidia late on Wednesday announced a second-quarter revenue
target more than 50% above Wall Street estimates with plans to 
boost supply to meet surging demand for its
artificial-intelligence chips, which are used to power popular
services including ChatGPT. 
    Susquehanna International Group analyst Christopher Rolland
described the beat as "unfathomable" in a research note titled
"greatest beat of all time?" where he said he raised his price
target to $450 from $350 for Nvidia, which last traded at 
$386.99.
        "It looks like the new gold rush is upon us, and NVIDIA
is selling all the picks and shovels," Rolland wrote.
  
    Still, besides Nvidia, the biggest gainers in the chip index
included NYSE listed shares of Nvidia chip manufacturer Taiwan
Semiconductor  TSM.N , which were up 11.5%, power supply company
Vicor Corp  VICR.O  was up more than 15%, and component supplier
Monolithic Power  MPWR.O , whose shares were up 16.4%. 
    Dylan Patel, an analyst with SemiAnalysis, said Monolithic
Power is supplying power delivery modules to Nvidia's flagship
AI chip, the H100.
    In contrast, investors in rival Intel Corp  INTC.O  had the
opposite reaction to Nvidia's news, sending shares in the
chipmaker down 6.5% as Intel has been struggling to catch up
with rivals like Nvidia.
    "Anything with a hint of AI is up," said Bernstein analyst
Stacy Rasgon. "Anything that is seen as a non-beneficiary, or
god-forbid a AI loser, is down."
    Also soaring on Thursday was rival Advanced Micro Devices
 AMD.N , which is expected to release new chips that could help
it compete with Nvidia in AI, later this year. AMD shares were
up 10.7%.
    Shares in Applied Materials  AMAT.O , a supplier of chip
manufacturing equipment, were up 5.8% and other companies
involved in chip manufacturing process including ASLM Holdings
 ASML.O  and KLA Corp  KLAC.O  and Lam Research  LRCX.O  were up
more than 5%. 
     In the 15 plus years he's been covering chips Bernstein's
Rasgon said he's "never seen a guide like the one NVDA just put
up with (fiscal second quarter) outlook that was by all accounts
cosmological, and which annihilated expectations."

 (Reporting By Sinéad Carew in New York, Stephen Nellis in San
Francisco, Editing by Nick Zieminski)
 ((sinead.carew@thomsonreuters.com; +13322191897;))