Big news from Nvidia (NASDAQ:NVDA) today has other chip stocks absolutely taking off. From Advanced Micro Devices (NASDAQ:AMD) to Intel (NASDAQ:INTC), Micron (NASDAQ:MU) and GlobalFoundries (NASDAQ:GFS), we are seeing some big moves within semiconductor companies.
Such a correlated move suggests sentiment is shifting in this sector. Indeed, concerns around valuations and other macroeconomic issues had led to a selloff earlier this year. However, revitalized interest in chip makers has investors sharpening their pencils.
Today, the continued rally in equity markets has benefited these growth stocks in a big way. Let’s dive into where this rally comes from and what news Nvidia shared.
Chip Stocks Soar on Potential Collaboration Deals
Yesterday, news arose that Nvidia and Intel were exploring a chip manufacturing deal. On a call with reporters, Nvidia CEO Jensen Huang noted the company was interested in potentially using Intel’s foundries. Such a move would strategically make sense, as it would shift at least a portion of Nvidia’s production stateside. Given the geopolitical risk right now, these talks are perhaps less surprising than they would have been a few months ago.
Now, it’s worth noting that Intel’s foundries are still under construction in the United States and Europe. Accordingly, any potential collaboration would likely actually unfold years down the road. Additionally, Nvidia did stipulate that in order for such a deal to work, Intel would need to achieve the same caliber of Taiwan Semiconductor (NYSE:TSM). That’s a rather high bar to hit.
That said, this potential collaboration is being viewed as a positive for the industry. As investors look to this sector for growth, how these companies choose to position themselves matters. Right now, investors appear to like what they see coming from chipmakers.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
