Shares of the semiconductor company Advanced Micro Devices (AMD +13.85%) climbed this morning as tech investors grew more optimistic that a potential ceasefire or slowdown in the war in Iran was around the corner.
AMD's stock could also be responding to some recent news from Arm Holdings' that its AI chip could generate significant sales over the next few years. The sentiment that rising tides lift all boats may be playing out here as investors take any sign of one semiconductor company doing well and apply it to others.
AMD's shares were up by 6.5% as of 11:15 a.m. ET.
Image source: Getty Images.
Signs of life from semiconductor stocks
Many tech stocks, and semiconductor companies in particular, have been on the decline lately as investors have become more risk-averse amid the war in Iran and other economic concerns. Rapidly rising oil prices as a result of the war have sparked fears of an economic slowdown, and even caused some economists to raise their predictions for the likelihood of a recession in the next 12 months.
But there have been some reports lately that President Trump may be working toward a ceasefire with Iran, leading to more market optimism. The war doesn't have anything to do with AMD specifically, but investors are concerned prolonged fighting will slow the U.S. and global economies.
Adding to today's optimism is that fellow semiconductor company Arm Holdings said its new artificial intelligence processor could generate $15 billion in sales by 2031. The positive outlook for Arm's new AI chip encouraged AMD's investors that more growth in the AI market is still ahead.
NASDAQ: AMD
Key Data Points
Nothing is set in stone
There's no definitive ceasefire agreement between the U.S. and Iran right now, and some of the latest reports even say that Iran isn't interested in accepting one. All of which means that jumping on any one stock right now, including AMD's, based on initial rumors, isn't a good idea.
Instead, investors should be focused on AMD's long-term prospects in the artificial intelligence market and the potential for the company to benefit from surging AI data center spending in the coming years.
