What Happened?

A number of stocks jumped in the afternoon session after Jensen Huang's (Nvidia's CEO) GTC Taipei keynote at Computex reframed how large and how long the AI chip cycle will run. 

The first announcement — Vera Rubin entering full production — confirmed the next wave of data center AI compute is now locked in. Vera Rubin, Nvidia's successor to Blackwell, delivers a 10x reduction in inference token cost and requires 4x fewer GPUs to train the same models. Thousands of Nvidia engineers were involved in its development, and system builders already in full-scale production include Dell, HPE, Lenovo, Supermicro, and IBM. That list is a read-through for the entire AI supply chain: every name on it needs more servers, more memory, more optical connectivity, and more chip equipment. 

The second announcement carried a different charge. Nvidia unveiled RTX Spark — an Arm-based AI PC chip co-developed with MediaTek — and Jensen Huang said Nvidia and Microsoft are going to "reinvent the PC." RTX Spark integrates a Blackwell GPU and a Grace CPU on a single package with 128GB of unified memory, capable of running 120-billion-parameter AI models locally without cloud connectivity. It launches later in the year on Windows PCs from Microsoft, Dell, HP, ASUS, Lenovo, and MSI.

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 Applied Materials (NASDAQ: AMAT) jumped 5.8%. Is now the time to buy Applied Materials? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company Photronics (NASDAQ: PLAB) jumped 3.9%. Is now the time to buy Photronics? Access our full analysis report here, it’s free.

Zooming In On Applied Materials (AMAT)

Applied Materials’s shares are very volatile and have had 23 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 7 days ago when the stock gained 5.2% on the news that Micron's blowout day signaled that AI-driven chip demand is structurally undersupplied which is bullish news for the equipment makers and foundries that build the capacity. 

Semiconductor manufacturing equipment (Applied Materials, Lam Research, KLA, ASML) and foundries (TSMC, GlobalFoundries) benefit when chip companies announce capacity expansions. Every dollar of additional Micron capex flows to the equipment makers that supply the tools, and every new fab Micron builds is a multi-year revenue stream for the foundries that share processes. UBS estimated Micron will spend $50B+ on capacity over the next 5 years. At industry-average tool intensity, that's billions of equipment orders.

Applied Materials is up 80.6% since the beginning of the year, and at $485.58 per share, it has set a new 52-week high. Investors who bought $1,000 worth of Applied Materials’s shares 5 years ago would now be looking at an investment worth $3,493.

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