TXN - Chips rise after Nvidia $50M AI investment Broadcom deal approval

2023-07-12 14:12:16 ET

Semiconductor stocks were largely in the green on Wednesday, aided in part by a large investment by sector giant Nvidia ( NASDAQ: NVDA ) and acquisition approval for Broadcom ( NASDAQ: AVGO ).

Nvidia ( NVDA ) shares rose 3% after the company said it would invest $50M into biotech company Recursion's ( RXRX ) AI models used for drug discovery.

Recursion ( RXRX ) will utilize Nvidia's ( NVDA ) cloud platform to train its AI models using its over 23 petabytes of biological and chemical dataset.

Recursion ( RXRX ) shares soared 82% on the news.

Separately, it was reported that Japanese tech conglomerate SoftBank ( OTCPK:SFTBY ) is in talks with Nvidia ( NVDA ) to bring it on as an "anchor" investor in the upcoming IPO of chip design firm, Arm.

AMD ( AMD ) and Intel ( INTC ), which both compete with Nvidia in the GPU space, gained more than 2.5% and 1% , respectively.

Broadcom ( AVGO ) added 0.8% after the European Union granted the company a conditional approval to acquire VMware ( NYSE: VMW ) and further diversify its offerings.

Competitors Texas Instruments ( TXN ), Qualcomm ( QCOM ), Microchip ( MCHP ) and Analog Devices ( ADI ) all rose 2% or more on Wednesday.

European chipmakers saw increased investor interested as Jefferies upgraded STMicroelectronics ( NYSE: STM ) and Infineon ( OTCQX:IFNNY ), noting that the sector is now in an "upcycle."

"While it is normal to be pessimistic on end-demand at the bottom of the cycle, we predict growth to positively surprise through 2024 and 2025 on the back of structural drivers including AI, cloud computing, edge computing, IoT, EVs, ADAS, renewable energy and VR/AR, amongst others," analyst Janardan Menon wrote in an investor note.

Most other semiconductor stocks were largely on firmer ground on Wednesday, including Skyworks Solutions ( SWKS ), ON Semiconductor ( ON ), Micron Technology ( MU ) and NXP Semiconductors ( NXPI ).

More on the future of the semiconductor industry

• Nvidia slips even as Goldman says it's entering new phase of GenAI prowess
• Intel on target to regain tech leadership, foundry a necessity: Northland
• Time is on China's side in the chip war - here's the Jefferies trade

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