What Happened?
A number of stocks jumped in the afternoon session after the Nasdaq rebounded, up 1.8%, as Trump's Iran peace deal announcement released the rate pressure that weighed on the sector all week.
Semiconductor stocks trade at elevated multiples on future earnings, making them disproportionately sensitive to interest rates. Oil falling more than 3% and the 10-year Treasury yield dropping to 4.47% released the rate hike pressure that drove the sector's worst week since 2020.
The structural AI demand story never broke: Intel's BofA double upgrade to $135 earlier in the day confirmed hyperscalers are placing real production orders at domestic foundries, and AI infrastructure capex commitments remained intact.
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 Lam Research (NASDAQ: LRCX) jumped 11.5%. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Nova (NASDAQ: NVMI) jumped 8%. Is now the time to buy Nova? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Teradyne (NASDAQ: TER) jumped 7.6%. Is now the time to buy Teradyne? Access our full analysis report here, it’s free.
Zooming In On Lam Research (LRCX)
Lam Research’s shares are extremely volatile and have had 33 moves greater than 5% over the last year. But moves this big are rare even for Lam Research and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 2.8% on the news that UBS raised its price target on the stock to $375 from $310, adding to an ongoing rally.
The move by UBS followed a series of positive analyst actions and built on momentum from Lam Research's strong fiscal third-quarter results reported in April. During that report, the company exceeded estimates for both revenue and earnings per share. The stock's strength is also supported by surging demand within the semiconductor industry, driven by the expansion of artificial intelligence, and higher expectations for spending on wafer fabrication equipment—the machinery used to create computer chips.
Lam Research is up 94.9% since the beginning of the year, and at $360.72 per share, it has set a new 52-week high. Investors who bought $1,000 worth of Lam Research’s shares 5 years ago would now be looking at an investment worth $5,618.
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