The Unstoppable Rise of Nvidia and Other Semiconductor Stocks



Nvidia (NASDAQ:NVDA) stock has been actively traded all week. Nvidia stock is up 2.2% by 10:30 a.m. ET today, making it the fourth day in a row that shares of the leader in chips for gaming have closed higher.

Cathie Wood’s consistent purchasing was likely a significant factor in it. In contrast to Nvidia, shares of Intel (NASDAQ:INTC) and Applied Materials (NASDAQ:AMAT), which create equipment for making semiconductors, are also rising. Right now, shares of Intel are up 1.8%, while shares of Applied Materials are up 2.6%.

What’s the Reason?

The growth investing legend reportedly paid almost $3.6 million yesterday to purchase 25,400 shares of Nvidia, as was announced on the ARK website late last night. True, the $1.2 billion ARK Autonomous Technology & Robotics ETF (ARKQ 2.50%) and the $1.5 billion ARK Next Generation Internet ETF (ARKW 3.82%) that made investments are enormous compared to the number of shares they own. However, it seems that Wood has been doing much more shopping than that, spending over $50 million to purchase more than 375,000 shares of Nvidia via the many ARK funds that have been buying up Nvidia shares since late last week.

That’s a lot more important, too.

It isn’t simply Wood that’s making purchases. The Fly reported this morning that investment firm Evercore ISI has released a note declaring Nvidia shares “very attractive” at $135 per share. It’s possible that it’s not a coincidence that Wood started purchasing last week at approximately $135.

However, Nvidia (NASDAQ:NVDA) China operations are still fraught with uncertainty in light of the Chinese government’s recent imposition of export license restrictions for a subset of the company’s data center processors. Evercore believes Nvidia (NASDAQ:NVDA) has a reasonable chance of securing the required licenses and that even if it doesn’t, “alternative product offers” might make up for any lost data center revenue in China.

What’s Next?

All OK then. If that’s the case, we may now understand why shares of Nvidia (NASDAQ:NVDA) have been rising steadily this week.

Intel, too, has some good news to share: the company announced this morning that it has “broken ground” on two new semiconductor manufacturing sites in Ohio, marking the beginning of an investment of $20 billion in a new production in the state.

As for Applied Materials, it only makes sense that the company would benefit from the success of its customers; S&P Global Market Intelligence reports that Applied Materials includes both Intel and Nvidia’s contract manufacturer Taiwan Semiconductor Manufacturing Company, among its clients. But there’s more good news: a survey from the Semiconductor Industry Association earlier in the week showed that, although slowing, worldwide semiconductor sales climbed 7.3% year over year in July. This included increases of 20.9% in the Americas, 15.2% in Europe, and 13.1% in Japan.

To sum up, fears of a complete collapse in the semiconductor industry may have been unfounded. Shares of Applied Materials (currently selling for just 12.2 times trailing earnings) and Intel (currently selling for just 11.7 times trailing earnings) may already reflect the risk that the industry is slowing down (at 6.5 times earnings). Nvidia stock’s 44 P/E ratio makes it the most volatile of the three.

Nvidia (NASDAQ:NVDA) stock has been down 38% in the last year, so even at that high price, investors are considering buying again.

Featured Image – Megapixl © Rafaelhenriquepress

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About the author: Ivy Palinlin is a content writer who is interested in beauty, health, and finance. She likes to put a lot of her emotions, experiences, and opinions into what she writes. She strives to write content that others can connect or relate to in some way.