Nvidia's Stock Leads the S&P 500, But Not All Chip Stocks Are Doing Well

Nvidia Corp.'s stock is on track for its second consecutive day of gains amid a strong session for semiconductor stocks.

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Early on Tuesday, two of the top three performers in the S&P 500 SPX were high-performing semiconductor stocks. Nvidia shares (NVDA) led the way, rising by 3.8%, while Micron Technology Inc. (MU) ranked third with a 2.4% increase. Corning Inc. (GLW), a company that manufactures optical products crucial to the artificial intelligence boom, took the second spot, climbing 3.4% and building on its substantial rally from Monday.

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However, not all chip stocks participated in the rally. Advanced Micro Devices Inc. (AMD) shares dropped by 1% in Tuesday morning trading, even though the stock had gained 9% over the previous two sessions.

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KeyBanc Capital Markets analyst John Vinh raised his price target for Nvidia shares from $130 to $180 in a report released on Tuesday. Vinh expressed optimism about the revenue potential of Nvidia's new Blackwell chip lineup. He estimated that Nvidia's GB200 chip, part of the Blackwell family, could generate more than $200 billion in data-center revenue by 2025. "AI demand continues unabated," Vinh wrote.

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Vinh also expressed a positive outlook on Micron, among other companies. He noted indications that Samsung is facing difficulties qualifying its HBM3e, a type of high-bandwidth memory, with Nvidia due to performance and manufacturing yield issues. This situation suggests that Samsung is unlikely to gain significant market share with the Blackwell chips, which could benefit Micron. "We believe this will support Micron gaining outsized share on HBM3e, likely exceeding its traditional DRAM share," Vinh stated. He raised his price target for Micron to $165 from $160.

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On the other hand, Vinh lowered his price target for AMD shares from $230 to $220, citing mixed signals from supply-chain conversations in Asia. "Improving traditional server demand should be a tailwind for the continued ramp of Genoa," Vinh noted, adding that there is still demand to support the purchase of 500,000 MI300X graphics-processing units. However, he also pointed out some negatives: "We believe embedded demand remains weak and continues to face inventory destocking headwinds."

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In summary, while Nvidia and Micron are seeing significant gains and positive analyst outlooks, AMD is experiencing a setback due to mixed signals from supply-chain conversations, leading to a lowered price target. This highlights the varied performance within the semiconductor sector, influenced by both company-specific developments and broader market trends.

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