Chip stocks rallied on Tuesday, driving outsized gains for leading semiconductor companies like Nvidia (NVDA) and Micron Technology (MU).
Graphics-chip maker Nvidia saw its shares jump 5.8% to close at 227.91 on the stock market today. Memory-chip maker Micron shares rose 5.3% to 50.48.
Nvidia and Micron are two of the five chip stocks currently on the IBD 50 list of top-performing growth stocks. The others are chip-equipment makers Entegris (ENTG), Lam Research (LRCX) and MKS Instruments (MKSI).
The broader stock market indexes gained Tuesday amid conciliatory comments on trade by China’s President Xi Jinping. In the chip sector, IBD’s semiconductor-equipment industry group was up 3.2% midday. The fabless semiconductor group was up 3.1%. The computer-data storage group was up 3.1%. The semiconductor manufacturing group was up 2.5%.
Morgan Stanley on Tuesday upgraded Nvidia stock to overweight from equal-weight with a price target of 258.
Chip Leader In AI
Nvidia is a clear leader in artificial intelligence and machine learning, Morgan Stanley analyst Joseph Moore said in a note to clients. Strong demand for its data center and gaming processors will help offset recent weakness in chips for cryptocurrency mining, he said.
Also Tuesday, Needham analyst Rajvindra Gill reiterated his buy rating on Nvidia with a price target of 300.
He said the stock fell 10% over the prior 10 days because of investor overreaction to a fatal Uber self-driving car crash and competition in cryptocurrency mining from ASIC chips. Nvidia is a player in both autonomous driving and cryptocurrency mining.
“We argue that both events will have an immaterial financial impact to Nvidia’s bottom line,” he said in a report.
Elsewhere, Mizuho Securities analyst Vijay Rakesh reiterated his buy rating on Micron stock with a price target of 70.
“With the stock off about 20% from recent highs, we remain buyers as we see a stronger second half” of 2018, Rakesh said in a note to clients.
