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After taking a beating for the past week, chip stocks climbed Tuesday morning as part of a broader market rally.
Nvidia (NVDA+0.54%) shares had lost almost 15% over the previous three trading sessions but had clawed back 8% by midday Tuesday before retreating slightly.
Meanwhile, other leading chip makers, including Broadcom (AVGO-1.52%), Intel (INTC+4.31%), Micron Technology (MU+2.76%), Lam Research (LRCX+1.45%), Applied Materials (AMAT+0.50%), Samsung, and Cisco (CSCO+0.71%) were also up Tuesday.
Nvidia’s slide accelerated last week after HSBC analyst Frank Lee downgraded the stock from a “buy” to a “hold,” noting that Nvidia’s earnings and guidance beats in the last three quarters have been shrinking due to “increasing market focus on Nvidia’s earnings as well ongoing uncertainty over its Blackwell supply chain ramp-up.”
Meanwhile, other chip stocks were getting better reviews from analysts. For instance, GuruFocus research shows that Broadcom has received a “Strong Buy” rating from nearly 88% of brokerage analysts.
Trump’s trade war had sunk chip stocks as fears over slowing demand and high prices took hold. However, semiconductors are exempt from new tariff rates imposed on a slate of countries, which should insulate chip makers from some tariff turmoil.
Also of concern: Data centers planned by major IT companies have been delayed or shelved as uncertainty surrounding ROI increases.
Microsoft (MSFT+0.24%) announced yesterday that it has abandoned its $1 billion data center project in Licking County, Ohio, citing a strategic investment review. Data centers are a key driver of chip manufacturing growth.