What Happened?

A number of stocks jumped in the afternoon session after industry giant Taiwan Semiconductor Manufacturing Co. posted stronger-than-expected quarterly results, fueling optimism about sustained demand for artificial intelligence (AI) hardware. 

As the world's largest contract chipmaker, TSMC's performance is often seen as a key indicator for the entire tech industry. The company reported record fourth-quarter revenue, surpassing Wall Street estimates, driven by robust demand for advanced chips used in AI applications. 

This positive report has created a ripple effect across the sector, boosting shares of other semiconductor companies and equipment suppliers like ASML, Nvidia, and AMD. Investors are interpreting TSMC's success and its plans to increase capital spending as a strong signal that the AI-driven upcycle for semiconductors is resilient and likely to continue.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Semiconductor Manufacturing company Nova (NASDAQ: NVMI) jumped 6.9%. Is now the time to buy Nova? Access our full analysis report here, it’s free.
• Memory Semiconductors company Seagate Technology (NASDAQ: STX) jumped 3.7%. Is now the time to buy Seagate Technology? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company Kulicke and Soffa (NASDAQ: KLIC) jumped 4.5%. Is now the time to buy Kulicke and Soffa? Access our full analysis report here, it’s free.
• Analog Semiconductors company MACOM (NASDAQ: MTSI) jumped 2.8%. Is now the time to buy MACOM? Access our full analysis report here, it’s free.
• Analog Semiconductors company Vishay Intertechnology (NYSE: VSH) jumped 5.4%. Is now the time to buy Vishay Intertechnology? Access our full analysis report here, it’s free.

Zooming In On Nova (NVMI)

Nova’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 13 days ago when the stock gained 6.3% on the news that a broad rally in semiconductor stocks kicked off the new year, driven by continued investor enthusiasm for artificial intelligence (AI). 

The move was part of a wider "risk-on" appetite that saw the Nasdaq Composite surge early in the session. Investors rotated back into high-growth tech stocks, with the semiconductor industry appearing poised to anchor the market's trajectory. Market analysts noted that the bullish themes from the previous year, particularly around AI and tech, were carrying forward into the new year. This sentiment was supported by the view that the chipmaking industry would remain supply-constrained as companies continued to build out the new infrastructure required for AI.

Nova is up 25.3% since the beginning of the year, and at $435.13 per share, has set a new 52-week high. Investors who bought $1,000 worth of Nova’s shares 5 years ago would now be looking at an investment worth $5,567.

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