What happened
Nio (NIO -5.00%) stock is having a solid run so far this week, and it rallied even higher Wednesday, gaining 4.1% at its highest point of the session.
Ironically, the Chinese electric vehicle (EV) company reportedly just denied having partnered with one of the world's largest semiconductor chip manufacturers, but investors remain upbeat about it one day ahead of its earnings release.
So what
One of the biggest challenges for EV manufacturers across the globe recently has been a shortage in semiconductor chips. So when a couple of days ago, Advanced Micro Devices posted a video on Chinese media platform Weibo saying it had partnered with Nio to supply it with chips, investors in the automaker were unsurprisingly excited.
Image source: Nio.
However, on Wednesday morning, China-based website CnEVPost, which focuses on the new-energy vehicle industry, reported that Nio had denied it had formed such a partnership with AMD. It even reported that Nio's senior director of corporate communications, Ma Lin, had asked AMD to remove the video from Weibo.
It's an unusual turn of events, and on any other day, Nio stock would've probably dropped on such a bizarre development. But investors didn't pay much heed to it, as they remain focused on the results they will see Thursday.
With Chinese EV rivals XPeng and Li Auto beating estimates in their respective first quarters and China easing the most recent pandemic lockdowns that hindered Nio's operations, investors are positive about Nio's numbers and outlook.
In fact, just about a week ago, Nio reported 38% sequential jump in its deliveries for the month of May. A breakdown of Nio's monthly sales numbers also revealed strong demand for its flagship ET7 sedan, deliveries of which started on March 28.
Now what
There's another reason why investor optimism in Nio is picking up: Investors think they can finally put their fears about the Chinese government's tech crackdown on the back burner. Regulators there just granted publishing licenses to 60 online games, providing relief to the nation's video game industry and reaffirming investors' faith that Beijing is following through on earlier suggestions that it would ease up the pressure on the tech sector.
To be sure, China primarily targeted tech stocks during its crackdown, but its extent was enough to scare investors in non-tech Chinese stocks listed in the U.S. as well -- and Nio is one of them.
As for its Q1 numbers, Nio will announce them Thursday before the U.S. markets open. Nio already revealed that it delivered 25,768 vehicles in the first quarter, in line with its estimate and up 28.5% year over year. Nio previously guided for Q1 revenue growth of at least 20% year over year. With the company also announcing its international expansion plans recently and saying it'll ramp up production and deliveries from June, the market's expectations for this high-potential EV stock continue to run high.
