Today is a good day for the consumer electronics industry. Samsung just reported earnings for the second quarter of 2022, surpassing expectations in several key categories. After a difficult year for semiconductor production, some experts weren’t optimistic about chip stocks. But Samsung reported a 21% revenue increase for Q2 — welcome news for investors. More broadly, these results are a positive sign for the sector at large. Now, chip stocks are rising.
In fact, a few rival chip stocks have actually surpassed Samsung as of this writing. Intel (NASDAQ:INTC) is up more than 2% today. Meanwhile, Nvidia (NASDAQ:NVDA) is up more than 3%. Finally, Advanced Micro Devices (NASDAQ:AMD) and Qualcomm (NASDAQ:QCOM) are both up by about 5%.
Let’s take a closer look at some of the forces pushing chip stocks higher today.
Why are Chip Stocks Up?
The sector-wide surge in chip makers is a significant shift in market momentum. Very recently, all of these aforementioned stocks were struggling against bearish energy and what investors perceived as declining demand. InvestorsPlace’s Shrey Dua reported yesterday that “chips are the single worst-performing sector so far this year” and that the Philadelphia Stock Exchange Semiconductor Index had “shed more than 35% of its value year-to-date.”
Today, though, Bloomberg is reporting that Samsung’s latest earnings will now be seen as a “bellwether for electronics demand.” Analyst Song Myung-sup of HI Investment & Securities notes that the earnings were “less bad than expected” despite “huge worries” and lowered estimates.
That in mind, it’s hard not to see why chip stocks are rising today. Experts had expected a poor earnings report from the industry leader. So, when Samsung surpassed expectations, that gave analysts and investors cause for optimism. Now, despite being down yesterday, the Philadelphia Stock Exchange Semiconductor Index is up more than 3% so far today.
The Bottom Line
Samsung’s earnings results are signaling the positive turnaround that chip stock investors have been hoping for. Although these chip stocks will likely keep rising, it’s hard to predict which will be the biggest winner. In May, InvestorPlace contributor Nicolas Chahine called AMD “a star.” But as fellow contributor Mark Hake reminds investors, Qualcomm is also due for growth.
All told, chip stocks are worth watching right now as demand picks up again.
On the date of publication, Samuel O’Brient did not hold (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.
