Nvidia (NVDA) shares rose more than 10% on Wednesday, following better-than-expected guidance from peer AMD (AMD) and an upbeat call from Morgan Stanley analysts after a more than 20% drop in the stock .
AMD’s quarterly results released on Tuesday dispelled some concerns that the AI trade may have run its course as investors exited Big Tech last month as the company beat expectations on earnings and results and posted a better-than-expected outlook for the third quarter.
“The fear that some of this momentum won’t last, or perhaps the fear that the revenue trajectory won’t be there for the next 12 months or so — I think that’s starting to fade,” said Angelo Zino, senior equity analyst at CFRA, to Yahoo Finance on Wednesday. .
AMD shares rose as much as 6% in early trading.
Chip pairs including Broadcom (AVGO), Micron (MU), Taiwan Semiconductor (TSM), ASML (ASML) and Super Micro (SMCI) were also recovering on Wednesday.
Nvidia shares were also boosted on Wednesday by a note from Morgan Stanley analysts led by Joseph Moore, who moved the stock to a ‘Top Pick’ after shares following a recent pullback from record highs reached in June.
The firm wrote that the roughly 25% selloff in Nvidia shares “presents a good entry point as we continue to hear strong short- and long-term data with competitive concerns overblown.”
Morgan Stanley cited five key drivers of Nvidia’s recent decline — spending plans, competition, export controls, supply chain fears and valuation concerns — but said: “Through these concerns, the earnings environment is likely to remain strong, for Nvidia and the entire AI complex.”
The firm maintained its Overweight rating on the stock’s $144 price target.
Nvidia shares are still up more than 130% this year, outperforming the Nasdaq’s more modest 17% gain. The company is expected to release its next quarterly report on Wednesday, August 28.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X at @ines_ferre.
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