Intel and Nvidia lead rally in chip stocks

Thursday saw a surge of chip stocks as investors recovered their appetite for riskier assets and reacted to positive commentary from Nvidia and Intel earlier this week.

So far this year, chip stocks have been battered by inflation fears and concerns that the Ukraine situation could aggravate supply chain issues.

The iShares Semiconductor ETF was down 15% in 2022 as of Wednesday's close, while the S&P 500 was down 6.8% and the Nasdaq was down 12%.

On Thursday, Nvidia led the surge, rising 9.8% to its highest level since November. Nvidia announced during its investor day earlier this week that new server processors with an emphasis on artificial intelligence are on the way, as well as an aim to build the world's fastest AI supercomputer.

Ross Seymore of Deutsche Bank in a report on Wednesday, recommending keeping the stock, said “Fundamentally we continue to believe Nvidia is uniquely suited to benefit from the growth of AI in hardware and potentially software”

Intel's stock rose slightly under 7% on Thursday, its highest single-day rise in almost a year.

On Wednesday, CEO of Intel, Pat Gelsinger spoke before Congress, arguing that government subsidies for domestic production would strengthen American national security and help alleviate the present semiconductor shortfall plaguing the automobile industry and other important sectors of the economy.

In an interview on CNBC, the Intel CEO said, “Oil reserves have defined geopolitics for the last five decades”... “Where the fabs are for a digital future is more important,” he added.

Intel has revealed plans to invest at least $20 billion on a chip manufacturing facility in Ohio, as well as $36 billion in a new "mega plant" in Germany and other European centers.

Gelsinger said “Let’s build them where we want them, and define the world that we want to be part of in the U.S. and Europe”

The semiconductor rally was boosted by a Labor Department report showing that initial unemployment claims fell to their lowest level since 1969 last week. Shares of companies positioned to benefit from a U.S. economic resurgence were snatched up by investors.

On Thursday, AMD surged over 5%, while Broadcom gained 4.5 percent and Qualcomm climbed over 3%. They're all still on their year-end lows.