What Happened?
A number of stocks jumped in the afternoon session after a broad rally in the semiconductor sector kicked off the new year, driven by continued investor enthusiasm for artificial intelligence (AI).
The move was part of a wider "risk-on" appetite that saw the Nasdaq Composite surge early in the session. Investors rotated back into high-growth tech stocks, with the semiconductor industry appearing poised to anchor the market's trajectory. Market analysts noted that the bullish themes from the previous year, particularly around AI and tech, were carrying forward into the new year. This sentiment was supported by the view that the chipmaking industry would remain supply-constrained as companies continued to build out the new infrastructure required for AI.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Analog Semiconductors company Power Integrations (NASDAQ:POWI) jumped 5.6%. Is now the time to buy Power Integrations? Access our full analysis report here, it’s free for active Edge members.
- Semiconductor Manufacturing company Teradyne (NASDAQ:TER) jumped 7.5%. Is now the time to buy Teradyne? Access our full analysis report here, it’s free for active Edge members.
- Semiconductor Manufacturing company Entegris (NASDAQ:ENTG) jumped 7.3%. Is now the time to buy Entegris? Access our full analysis report here, it’s free for active Edge members.
- Semiconductor Manufacturing company IPG Photonics (NASDAQ:IPGP) jumped 5.2%. Is now the time to buy IPG Photonics? Access our full analysis report here, it’s free for active Edge members.
- Analog Semiconductors company Magnachip (NYSE:MX) jumped 4.9%. Is now the time to buy Magnachip? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Teradyne (TER)
Teradyne’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 3.1% on the news that investor optimism around artificial intelligence fueled broad market gains.
Technology stocks with a focus on artificial intelligence once again led the market higher, boosting the Nasdaq and S&P 500. Companies at the forefront of the AI boom, such as Nvidia and Broadcom, saw significant jumps in their share prices. The rally reflects a renewed belief among investors in the transformative potential of AI technology to drive future growth and productivity. The rally was further supported by a surprise cooling in the November consumer price index (CPI) report, which triggered market pricing for additional rate cuts in the coming year. This created a more favorable environment for growth-oriented companies.
Investors who bought $1,000 worth of Teradyne’s shares 5 years ago would now be looking at an investment worth $1,743.
Microsoft, Alphabet, Coca-Cola, Monster Beverage—all began as under-the-radar growth stories riding a massive trend. We’ve identified the next one: a profitable AI semiconductor play Wall Street is still overlooking.Go here for access to our full report.