Stock Market Today: The Chip Stocks Are Back

Stock Market

We had more gains in the stock market today. While the SPDR S&P 500 ETF (NYSEARCA:SPY) hovers just below its 52-week high, the PowerShares Nasdaq ETF (NASDAQ:QQQ) actually hit new annual highs in Friday’s session.

That’s as Amazon (NASDAQ:AMZN) posted a sharp post-earnings rebound. While shares finished lower on the day, down 1.1% at $1,761, it’s much better than the post-earnings low below $1,625 it was sporting in extended-hours trading.

The move comes after lower-than-expected guidance, as well as a year-over-year earnings decline that missed analysts’ expectations. Seeing such a recovery was impressive, to say the least. And it may have come at the perfect time.

That’s as Intel (NASDAQ:INTC) stock exploded higher, helping push the semiconductor space to new highs.

Chips Are Back, Back Again, Tell a Friend

It might be extreme to say Intel might be a game-changer. In fact, that is a little extreme, as it’s far from the only chip company in town and it does not have as wide a reach as others. Still, its robust quarterly numbers helped calm fears about the semiconductor, memory and chip space.

Earnings of $1.42 per share topped estimates by 18 cents per share, while revenue of $19.2 billion smashed expectations by $1.13 billion and grew 20 basis points year-over-year. Further, management boosted its Q4 and full-year outlook.

That makes you feel better about Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD), no? It also helps calm fears that began making their way around Wall Street after the top- and bottom-line miss and guidance cut that Texas Instruments (NASDAQ:TXN) gave us earlier in the week.

Intel’s price action goes alongside the strong bullish action investors saw in Applied Materials (NASDAQ:AMAT) and Lam Research (NASDAQ:LRCX) over the last few days. It should come as little surprise that the VanEck Vectors Semiconductors ETF (NYSEARCA:SMH) hit new 52-week highs in the session.

While not the end-all, be-all data factor, the SMH at 52-week highs is hardly indicative of a recession.

Movers in the Stock Market Today

Carrying over from the chip conversation, Nvidia stock caught a nice upgrade on Friday. RBC Capital Markets actually went as far as to say Nvidia is the “best large cap name” to own right now. Given that news, it should come as little surprise that they have an “outperform” rating on the name.

Further, the analysts raised their price target from $217 to $251, a new Street high. The stock closed over $200 for the first time this year and ended the day at a new 2019 high.

Tyson Foods (NYSE:TSN) shares gain 1% on the day after analysts at Bank of America Merrill Lynch initiated the stock with a “buy” rating and $97 price target. Given that TSN ended the prior session just under $78, the target represents fairly healthy upside. It implies almost 25% upside.

The streaming wars continue to heat up, this time with news out of AT&T’s (NYSE:T) HBO unit. The company’s HBO Max streaming service will rollout to 10 million AT&T customers who are also HBO customers. It’s not unlike what we’re seeing from other companies getting into the streaming game, like Disney (NYSE:DIS).

However, one has to expect this could put a squeeze on a company like Netflix (NASDAQ:NFLX). The company continues to raise debt to fund its content plans and maintain its platform. Companies like HBO, Disney and others benefit from the fact that they already have a vast content library.

HBO is targeting to have 80 million global customers by 2025, with 50 million of those subscribers coming from the U.S. That should also bode well for a company like Roku (NASDAQ:ROKU).

A wildfire in Northern California could disrupt the bankruptcy path of PG&E (NYSE:PCG). Shares tumbled 31% to $5 on the day, as investors suspect the company may have some liability in the fire. While the official cause isn’t clear, PG&E reported a down line minutes before the fire started. The development could pave the way to $0, according Citi analysts.

Finally, it’s worth mentioning that Apple (NASDAQ:AAPL) hit a new all-time high on Friday. However, it has some investors worrying if it has run too much ahead of its earnings report next week.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long NVDA, ROKU and AAPL. 

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