What Happened?
A number of stocks jumped in the afternoon session after traders positioned ahead of Nvidia's fiscal Q1 earnings.
Nvidia accounted for a significant percentage of the S&P 500's gains heading into the announcement, making the print the binary catalyst for the entire AI-infrastructure complex — networking ASICs, connectivity silicon, memory, and packaging all move together on the read-through.
Falling oil prices also supported the bullish sentiment. Semis carry arguably the longest-dated cash flows in the equity market because most of their value sits in 2027–2030 AI capex, not in the current quarter.
When Brent crude drops 5.21% (like it did during the session), expected inflation falls, the Fed gets more room to cut, and the discount rate applied to those distant cash flows compresses. A small rate move produces an outsized stock move, which is why a 5% oil decline can power 8%+ chip rallies on the same day.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Semiconductor Manufacturing company Teradyne (NASDAQ: TER) jumped 6.3%. Is now the time to buy Teradyne? Access our full analysis report here, it’s free.
- Analog Semiconductors company Monolithic Power Systems (NASDAQ: MPWR) jumped 5.2%. Is now the time to buy Monolithic Power Systems? Access our full analysis report here, it’s free.
- Analog Semiconductors company Vishay Intertechnology (NYSE: VSH) jumped 6.7%. Is now the time to buy Vishay Intertechnology? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Lam Research (NASDAQ: LRCX) jumped 6.2%. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Semtech (NASDAQ: SMTC) jumped 5.1%. Is now the time to buy Semtech? Access our full analysis report here, it’s free.
Zooming In On Vishay Intertechnology (VSH)
Vishay Intertechnology’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 4.5% on the news that strong results from Advanced Micro Devices signaled robust and sustained demand for artificial intelligence (AI) infrastructure.
AMD reported a 38% year-on-year revenue increase, with its data center business surging 57% to $5.8 billion. This blowout report is seen by investors as confirmation that heavy spending on AI by major tech companies is creating a rising tide for the entire industry.
The positive outlook suggests that the high demand for chips and components needed to build out data centers is widespread. The news sparked a broad rally across the semiconductor sector, as the market anticipates that peer companies will also benefit from the ongoing AI infrastructure boom.
Vishay Intertechnology is up 158% since the beginning of the year, and at $39.48 per share, has set a new 52-week high. Investors who bought $1,000 worth of Vishay Intertechnology’s shares 5 years ago would now be looking at an investment worth $1,653.
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