Please ensure Javascript is enabled for purposes of website accessibility

Why Nvidia Stock Finally Popped Today

By Rich Smith – Dec 15, 2021 at 1:13PM

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

KeyBanc threw the chipmaker's shareholders a life preserver.

What happened

For five long days, it looked like Nvidia (NVDA 1.15%) stock could do no right -- the share price just kept dropping as investors sought out cheaper ways to play the global semiconductor shortage.

That ended Wednesday morning when traders latched on to some positive commentary from an analyst at KeyBanc. As of 10:40 a.m. ET, Nvidia stock was up a solid 2%.

Green line heart monitor shows a big jump.

Image source: Getty Images.

So what

What did KeyBanc analyst John Vinn say to stop the slide? Not a lot, actually -- but apparently, enough.

As reports, the bank's "November cloud instance tracker" is showing strong demand for cloud computing services (and Nvidia's semiconductors help with those). Specifically, "instances" of cloud computing services being used grew by 29% year over year in November, and by 6% in comparison to October. The news was best for Microsoft's (MSFT 0.57%) Azure business, and Amazon's (AMZN 2.97%) AWS, both of which grew faster than average year over year.

Looking at the chipmakers, KeyBanc was most optimistic about Advanced Micro Devices (AMD -0.91%), whose chips largely power Microsoft's Azure, and less so about Intel (INTC -2.40%), noting that Intel's processor deployments grew 4% month over month and 22% year over year across all major cloud services providers -- below the averages.

Now what

And Nvidia? That's the strange thing. According to KeyBanc, the semiconductor company's "instances" number grew only 25% year over year -- good, but still below average. And Nvidia's growth was only 1% sequentially from October.

In the final analysis, KeyBanc declared these results positive for AMD, "moderately negative" for Intel, and only neutral for Nvidia. That wasn't great news, but it seems to have been at least enough to stop the sell-off of Nvidia's shares.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns and recommends Advanced Micro Devices, Amazon, Intel, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $57.50 calls on Intel, short January 2022 $1,940 calls on Amazon, and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.

Premium Investing Services

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