KEY POINTS

  • Nvidia investors are responding to a strong quarter from another semiconductor firm.

What’s going on with Nvidia stock

Nvidia stock was rising higher yesterday on no company-specific news. Instead, investors appear to be reacting to better-than-anticipated quarterly results by one of Nvidia’s(NASDAQ:NVDA) competitors — which indicates strength in the general semiconductor market. As of 11:51 a.m. ET on Monday, the stock was up 1.6%.

Why we care

ON Semiconductor (NASDAQ:ON), a chip producer specializing in the automotive and industrial markets, released its first-quarter results today. Non-GAAP earnings per share of $1.22 were reported, up from just $0.35 in the prior-year quarter, above the Wall Street consensus forecast of $1.05 per share.

The firm also reported quarterly sales of $1.95 billion, which exceeded Wall Street’s expectations of $1.9 billion.

If investors believe that the results from one company demonstrate that their shared market is doing well, then a robust financial performance from another firm can help lift sector share prices.

This appears to be what’s happening with Nvidia’s stock. Investors are pleased with ON Semiconductor’s recent earnings and believe the chip market is healthy.

It is the second time in less than a week that a semiconductor firm has exceeded Wall Street expectations. In addition, Qualcomm (NASDAQ:QCOM) recently reported second-quarter financial results, which were better than expected.

What now

Nvidia’s stock has dropped 26% over the previous six months, so it’s not surprising that investors are seeking any positive developments in the semiconductor industry.

Nvidia will release its first-quarter earnings on May 25, so investors will have to wait until then to determine if the company is benefiting from the chip market in the same way that ON Semiconductor and Qualcomm are now.

However, with the stock market showing significant price fluctuations in recent weeks, Nvidia’s stocks may still see more volatility.

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