NVIDIA and Broadcom Stocks Surge Following AMD Results

Shares of Nvidia and Broadcom opened higher on Wednesday, following a positive earnings report from AMD released on Tuesday after market close.

AMD reported earnings per share of $0.69 for the second quarter, exceeding the analyst estimate of $0.68. The company generated revenues of $5.84 billion, surpassing the consensus expectation of $5.72 billion.

Looking ahead, AMD projects its revenue for Q3 2024 to be around $6.7 billion, with a possible variation of $300 million, compared to the consensus estimate of $6.61 billion. At the midpoint of this range, it indicates an anticipated year-over-year growth of approximately 16% and a sequential growth of about 15%.

AMD’s favorable financial results have positively impacted the semiconductor sector, elevating the stock prices of competitors. Shortly after the market opened, Nvidia’s shares rose by over 8%, while Broadcom’s shares increased by nearly 6%.

The strong quarterly earnings report from AMD, driven by robust demand, has created a ripple effect throughout the industry. Nvidia, recognized for its expertise in graphics processing units and artificial intelligence technology, reacted positively to AMD’s performance. Likewise, Broadcom, a significant player in the semiconductor and infrastructure software markets, benefited from the prevailing optimistic market sentiment.

Analysts from Morgan Stanley commented on AMD’s report, noting that the company’s revenue guidance for Q3 indicates strong momentum in its compute businesses. They characterized the quarter as “a good quarter, all things considered,” acknowledging the unexpectedly favorable guidance.

Given management’s enthusiasm for AI during discussions in Q2, analysts had anticipated a slight increase in projections, which was indeed realized. They expressed concerns regarding elevated AI expectations, while the recent decline in AI-related stocks mitigated some of that apprehension. Although their revised numbers reflected only a slight increase, they noted the challenges posed by delays in the recovery of the highly profitable Xilinx business.

At the market’s open, shares of AMD saw a 9% rise.