Nvidia Shares Surge Despite Volatile Trading Day

Nvidia NVDA 2.80% stock experienced a turbulent trading day, marked by significant fluctuations. The stock opened Thursday with a 3.3% gain, but soon dipped as much as 1.2% before staging a strong recovery to close up 2.8% at $121.29. This volatile movement follows a 6% decline on Wednesday, prompted by investor concerns spurred by former U.S. President Donald Trump’s comments about Taiwan, which led to a sell-off in the chip sector.

Investor Confidence Remains Strong

Despite the recent drop, Nvidia shares appear to have fallen enough to attract buyers looking to capitalize on the dip. The company is still highly regarded as a leader in artificial intelligence. Mizuho’s Jordan Klein highlighted Nvidia’s continued appeal, noting in an email to Barron’s, “While the semiconductor and tech sectors face challenges and few are willing to catch the ‘falling knife,’ NVDA remains the ‘must-own true AI winner.’” He added that some investors are taking advantage of the recent weakness to buy shares, while others are entering the market for the first time due to the pullback.

TSMC’s Positive Outlook for AI Chips

Klein also pointed to positive signals from Taiwan Semiconductor Manufacturing Company (TSMC), which reported strong earnings overnight. TSMC, a key supplier of AI chips for Nvidia, indicated robust demand for high-performance computing hardware, including AI chips. Revenue from this segment rose approximately 28% from the previous quarter, suggesting continued strength in the AI market. As investors navigate ongoing geopolitical concerns and upcoming financial results, these indicators provide some reassurance.

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Long-Term AI Investment Recommendations

Mark Haefele, Chief Investment Officer at UBS Global Wealth, recommended focusing on long-term exposure to AI in his Thursday research note. He suggested that AI is expected to be a significant driver of equity returns in the future. “Within the tech-supply chain, we continue to favor select semiconductor equipment makers, GPU and custom-chip designers, foundries, and memory producers,” Haefele wrote.

Mixed Results Across the Chip Sector

The broader chip sector also showed varied results. The iShares Semiconductor ETF closed up 0.3%, while Advanced Micro Devices AMD -2.30% fell 2.3%. Intel INTC 1.20% gained 1.2%, and Qualcomm QCOM-0.07% ended slightly down by 0.1%. Nvidia’s shares have surged 138% year-to-date through Wednesday’s close, far outpacing the 17% increase in the S&P 500 SPX -0.78% and the 20% rise in the Nasdaq Composite over the same period.

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