Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of NVIDIA and AMD Jumped Today

By Joe Tenebruso - Updated Mar 9, 2021 at 8:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Strong growth prospects and discounted stock prices drove investors to buy these tech leaders.

What happened

Shares of NVIDIA (NVDA 5.08%) and Advanced Micro Devices (AMD 1.63%) rose sharply on Tuesday, as semiconductor stocks climbed alongside a broad-based rally in the Nasdaq Composite (^IXIC 0.00%).

By the close of trading, the chipmakers' stock prices were up 8% and 6.2%, respectively. 

So what

Following a roughly 10% pullback from its highs in February, the Nasdaq Composite rallied more than 3% on Tuesday. Market prognosticators credited a slight decline in interest rates as one of the reasons for the sharp upward move, but a more compelling reason is that many great stocks had simply fallen to levels that long-term investors found intriguing. 

Someone pointing to upwardly sloping digital stock chart

AMD and NVIDIA popped along with other tech stocks on Tuesday. Image source: Getty Images.

On Monday, Bank of America analyst Vivek Arya argued that NVIDIA and AMD were trading at attractive prices and reiterated his buy ratings on both stocks. Arya said that "a robust gaming environment" bodes well for sales of the chipmakers' graphics processing units (GPUs).  

Now what

In addition to strong gaming-related sales, higher sales of laptops and other mobile devices during the coronavirus pandemic have contributed to a chip shortage. This imbalance between soaring demand and limited supply is likely to help AMD and NVIDIA fetch relatively high prices for their chips, boosting their profit margins in the process. Today's gains, in turn, might be just the beginning of a larger rally in these semiconductor leaders' share prices. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NVIDIA Corporation Stock Quote
NVIDIA Corporation
NVDA
$169.75 (5.08%) $8.21
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,264.45 (0.00%) $0.00
Advanced Micro Devices, Inc. Stock Quote
Advanced Micro Devices, Inc.
AMD
$92.65 (1.63%) $1.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
322%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.