What Happened?
A number of stocks jumped in the afternoon session after AMD's deal with OpenAI intensified the ongoing AI frenzy that has powered the market.
The positive momentum was linked to an announcement that AMD and OpenAI entered into an agreement to power OpenAI's AI infrastructure with AMD's Instinct GPUs. This significant deal underscored the massive demand for advanced chips needed for artificial intelligence applications. The development occurred as the U.S. semiconductor manufacturing industry was already experiencing rapid growth, fueled by AI-driven demand and government support from initiatives like the CHIPS and Science Act.
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:
- Analog Semiconductors company Himax (NASDAQ: HIMX) jumped 6.3%. Is now the time to buy Himax? Access our full analysis report here, it’s free for active Edge members.
- Semiconductor Manufacturing company IPG Photonics (NASDAQ: IPGP) jumped 4.4%. Is now the time to buy IPG Photonics? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Himax (HIMX)
Himax’s shares are extremely volatile and have had 42 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 4.3% as a broad rally in the semiconductor sector lifted chip stocks across the board, driven by positive news from industry giants.
The positive sentiment was largely sparked by reports that Samsung's high-bandwidth memory chips, known as HBM3E, passed Nvidia's quality tests for use in its artificial intelligence (AI) processors. This development signaled strong demand and progress in the high-end memory market, which is critical for AI development. Adding to the upbeat mood, money flowed back into technology stocks as the S&P 500 and Nasdaq 100 indexes reached new record highs. The rally also reflected general optimism that the U.S. government wanted to encourage more domestic semiconductor production, creating a favorable environment for chipmakers like Himax.
Himax is up 23% since the beginning of the year, but at $9.20 per share, it is still trading 28.4% below its 52-week high of $12.85 from January 2025. Investors who bought $1,000 worth of Himax’s shares 5 years ago would now be looking at an investment worth $2,466.
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