What Happened?
A number of stocks jumped in the afternoon session after President Trump canceled planned military strikes on Iran and signaled a peace deal could be signed over the weekend.
Intel contributed an additional tailwind after Bank of America double-upgraded the stock from underperform to buy. War-driven inflation had lifted Treasury yields, compressing the valuations on capital-intensive chip stocks.
Separately, the Strait of Hormuz closure disrupted the chemical and specialty-gas supply chains that semiconductor fabrication depends on. Oil falling back toward $87 a barrel and the 10-year yield dropping would ease the knock on effects from both.
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:
- Processors and Graphics Chips company Allegro MicroSystems (NASDAQ: ALGM) jumped 3.7%. Is now the time to buy Allegro MicroSystems? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company IPG Photonics (NASDAQ: IPGP) jumped 3.4%. Is now the time to buy IPG Photonics? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Nova (NASDAQ: NVMI) jumped 3.9%. Is now the time to buy Nova? Access our full analysis report here, it’s free.
Zooming In On Nova (NVMI)
Nova’s shares are extremely volatile and have had 37 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 1 day ago when the stock gained 8% as the Nasdaq rebounded, up 1.8%, as Trump's Iran peace deal announcement released the rate pressure that weighed on the sector all week.
Semiconductor stocks trade at elevated multiples on future earnings, making them disproportionately sensitive to interest rates. Oil falling more than 3% and the 10-year Treasury yield dropping to 4.47% released the rate hike pressure that drove the sector's worst week since 2020. The structural AI demand story never broke: Intel's BofA double upgrade to $135 earlier in the day confirmed hyperscalers are placing real production orders at domestic foundries, and AI infrastructure capex commitments remained intact.
Nova is up 67.7% since the beginning of the year, and at $582.65 per share, it has set a new 52-week high. Investors who bought $1,000 worth of Nova’s shares 5 years ago would now be looking at an investment worth $5,769.
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