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:
- Semiconductor Manufacturing company Marvell Technology (NASDAQ: MRVL) jumped 3.2%. Is now the time to buy Marvell Technology? Access our full analysis report here, it’s free for active Edge members.
- Analog Semiconductors company Monolithic Power Systems (NASDAQ: MPWR) jumped 6.4%. Is now the time to buy Monolithic Power Systems? Access our full analysis report here, it’s free for active Edge members.
- Analog Semiconductors company MACOM (NASDAQ: MTSI) jumped 3.5%. Is now the time to buy MACOM? Access our full analysis report here, it’s free for active Edge members.
- Semiconductor Manufacturing company Photronics (NASDAQ: PLAB) jumped 2.7%. Is now the time to buy Photronics? Access our full analysis report here, it’s free for active Edge members.
- Semiconductor Manufacturing company Nova (NASDAQ: NVMI) jumped 3.9%. Is now the time to buy Nova? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Monolithic Power Systems (MPWR)
Monolithic Power Systems’s shares are very volatile and have had 27 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 6 days ago when the stock gained 1.3% on the news that an analyst from Needham raised the company's stock price target by 25% to $1,025.
The analyst kept a 'Buy' rating on the shares. This decision came after recent meetings with Monolithic Power's chief executive officer and other top leaders where growth drivers were discussed. The firm cited stronger demand for the company's power-management products as a reason for the increased target. This positive view was supported by the semiconductor company's solid financial health, which included robust revenue growth over the previous twelve months and strong profitability.
Monolithic Power Systems is up 62.9% since the beginning of the year, and at $968.23 per share, has set a new 52-week high. Investors who bought $1,000 worth of Monolithic Power Systems’s shares 5 years ago would now be looking at an investment worth $3,379.
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