What Happened?
Shares of semiconductor packaging and testing company Amkor Technology (NASDAQ: AMKR) jumped 3.5% in the morning session after a major AI-focused partnership in the chip sector boosted sentiment for stocks with exposure to the AI 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.
After the initial pop the shares cooled down to $30.49, up 3.7% from previous close.
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What Is The Market Telling Us
Amkor’s shares are quite volatile and have had 18 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 4.5% on the news that the company announced it completed a sale of new bonds to pay off older, more expensive debt.
Amkor issued $500 million in new senior notes with a 5.875% interest rate, due in 2033. The company planned to use the proceeds to redeem all $400 million of its outstanding notes that carried a higher 6.625% interest rate and were due in 2027. This financial maneuver, often called refinancing, is a positive sign for investors. By swapping higher-cost debt for a cheaper alternative, Amkor effectively lowered its future interest payments, which can improve profitability. The market's positive reaction suggested that investors viewed this as a smart move, reflecting prudent financial management and a stronger balance sheet.
Amkor is up 17.2% since the beginning of the year, and at $30.49 per share, it is trading close to its 52-week high of $31.61 from October 2024. Investors who bought $1,000 worth of Amkor’s shares 5 years ago would now be looking at an investment worth $2,670.
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