Nvidia earnings are boosting these other chipmakers. Here's why
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Nvidia posted blockbuster second-quarter results, and the enthusiasm is spilling over into other parts of the semiconductor sector. The company's revenue more than doubled in the second quarter from the year-earlier period. CEO Jensen Huang said he sees revenue growing by 70% in the coming fiscal year, sending shares up more than 5%. Nvidia's gain gave the VanEck Semiconductor ETF (SMH) a 2% lift in early trading. Memory stocks in particular appeared to benefit as well. Micron Technology , Sandisk and U.S.-listed shares of SK Hynix traded more than 3% higher. Higher stock prices in the memory subsector of the semiconductor industry came after Nvidia CFO Colette Kress said she expects memory chip prices to keep rising. MU 5D mountain MU 5-day chart "Memory scarcity today is being driven in large part by the AI buildout itself, and unlike a component that simply raises our cost with no offset benefit, tighter memory supply is a symptom of the same demand surge that's driving our own growth. We have long-standing deep relationships with all three major memory suppliers, and we're working closely with them to further increase the capacity our road map requires," Kress said on Nvidia's earnings call with analysts. Higher memory prices will pressure Nvidia near term, with Kress expecting profit margins to ease to around 71% in Q4 from about 74% in the third quarter, before moving back up again. Jefferies traders pointed out that Nvidia unveiled a new piece of hardware that can keep memory demand high. "In 'extreme pricing conditions' for memory now, and memory prices headed even higher next year," wrote Jefferies' trading desk. "The hit to margins and commentary about memory prices going even higher next year should be a [positive] read for memory."