Yesterday, Thursday, February 22, Nvidia (NVDA) gained 16.40% at the close after beating Wall Street expectations on earnings and revenue after the market close on Wednesday. And then raising guidance for the rest of 2024.
I think it’s safe to say we’re in the midst of a feverish AI melt-up. The narrative on Thursday was that artificial intelligence had turned a corner. AI was a cornerstone technology for the rest of this decade and beyond. And you’d better be on board.
If you owned shares of Nvidia, I’ll bet you ended Thursday wishing you owned more. And if you didn’t own Nvidia the odds are that you were about to buy some–hell, with wait for a dip. (It didn’t hurt the stock’s performance on Thursday that Nvidia had been heavily shorted going into earnings in the belief that expectations were so high that the company wouldn’t be able to meet them.)
But what most interested me on Thursday were what tech stocks Nvidia carried higher with it–and which stocks it didn’t. (I’m using Thursday instead of today, Friday, because weekend selling after a big gain is typical since many traders take profits ahead of two days without market action. Thursday is, in general, a more reliable picture of market trends.)
So what went up the most? Advanced Micro Devices (AMD), a Nvidia competitor with its own GPU and AI chips, was a big winner with a 10.69% gain on the day. The sense I have is that some investors think Advanced Micro is a cheaper AI alternative to Nvidia because the stock trades at just $181.86 versus $785.38 for Nvidia. That cheapness is deceptive, however because Advanced Micro sells for 343 times trailing 12-month earnings per share while Nvidia trades at just 66 times 12-month tailing earnings after this big quarter.
Shares of chip equipment makers climbed. Shares of Applied Materials (AMAT) gained 4.94% and ASML Holding (ASML) was up 4.81%.
Shares of Taiwan Semiconductor Manufacturing (TSM), which actually makes Nvidia’s chips, were ahead 2.98%.
Intel (INTC) lost 1.13%. Sentiment is that Intel is so far behind in the AI chip race that it might as well not be running at all. And that if you own it, you might want to use it as a source of cash to buy “real” AI stocks.
This was a day, however for AI hardware stocks–the makers of the shovels being sold to let other companies build AI products. Microsoft, arguably the leader in the AI applications race at the moment, was up a modest 2.35% on the day.
