What Happened?
A number of stocks jumped in the afternoon session after the broader market rallied on Iran peace progress and AI-linked growth names led the comeback in technology. Nvidia's Q1 results earlier in the week (beat-and-raise on $81.6B revenue with Q2 guidance of $89-92.8B and an $80B new buyback) initially produced a sell-the-news reaction, but the message digested over the next two sessions: AI capex is accelerating, not slowing.
The flywheel mechanism drove the sector higher. Every GPU shipped enables more AI training and inference, which generates demand for more GPUs, more CPUs (AMD EPYC, Intel Xeon), more custom silicon (Broadcom TPUs, Marvell ASICs), and more networking chips (Astera Labs). When rates cool, hyperscalers fund the next leg of the buildout more cheaply. When peace progress reduces inflation fear, the Fed has more room to cut.
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:
- Processors and Graphics Chips company Qorvo (NASDAQ: QRVO) jumped 7.2%. Is now the time to buy Qorvo? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Allegro MicroSystems (NASDAQ: ALGM) jumped 3%. Is now the time to buy Allegro MicroSystems? Access our full analysis report here, it’s free.
- Processors and Graphics Chips company Lattice Semiconductor (NASDAQ: LSCC) jumped 3%. Is now the time to buy Lattice Semiconductor? Access our full analysis report here, it’s free.
Zooming In On Qorvo (QRVO)
Qorvo’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock dropped 4.4% on the news that hot April CPI sent Treasury yields higher, eliminating 2026 rate-cut hopes, a direct headwind for high-multiple growth stocks.
Semiconductor companies sell into long-cycle hardware demand, but their stocks behave like growth equities, valued on future earnings. The discount rate investors apply to those future earnings is set by Treasury yields. When yields rise, as they did during the day on the hot CPI print, the present value of future earnings falls mechanically, compressing the price-to-earnings multiple investors are willing to pay.
Qorvo is up 21.7% since the beginning of the year, and at $105.00 per share, has set a new 52-week high. Despite the year-to-date gain, investors who bought $1,000 worth of Qorvo’s shares 5 years ago would now be looking at only $587.82.
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