Semiconductor stocks, particularly those linked to artificial intelligence technology, rallied after the U.S. Federal Reserve cut benchmark interest rates to boost growth, led by Nvidia Corp (NASDAQ:NVDA), Broadcom Inc (NASDAQ:AVGO), Advanced Micro Devices, Inc (NASDAQ:AMD), Arm Holdings plc (NASDAQ:ARM) and Super Micro Computer, Inc (NASDAQ:SMCI).
The Federal Reserve Board (FRB) cut interest rates by 50 basis points for the first time since 2020, setting the benchmark interest rate at 4.75% and 5%, a move that is expected to boost discretionary spending by businesses.
A rate cut would be a welcome move for semiconductor companies, as they are investing heavily in big tech companies such as Microsoft Corp. (NASDAQ: MSFT), Amazon.com Inc. (NASDAQ: AMZN) and Google parent Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL) due to their artificial intelligence ambitions, which require significant capital expenditures.
Related article: Supermicro poised for expansion as gross margin concerns ease and internal control risks priced in: Analyst
Semiconductor companies are also under pressure from U.S. sanctions on China, a key market, so U.S. investors and semiconductor executives are closely watching the next president’s policies in hopes of a softer stance on China.
Republican candidate Donald Trump appears to be an investor favorite, according to a CNBC survey, with the S&P 500 and Nasdaq posting big gains during his presidency.
However, the current Biden administration has begun offering semiconductor subsidies to companies in order to bolster its own position.
Contract chipmaker Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), a key AI chip supplier to U.S. semiconductor companies, continues to invest heavily in building a factory in Arizona to produce AI chips after winning U.S. chip subsidies. The company recently won two smartphone chip contracts from Google and Apple.
Price Action: As of last check on Thursday, NVDA shares were up 3.16% to $116.95 in pre-market trading, AMD was up 3.74% to $153.84, AVGO was up 3.45% to $167.25, SMCI was up 3.00% to $450.00, TSM was up 2.80% to $171.97, INTC was up 2.31% to $21.25 and ARM was up 3.78% to $143.59.
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The article What’s happening with AI stocks Nvidia, AMD, Broadcom, and Super Micro on Thursday? originally appeared on Benzinga.com.
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