What Happened?

Shares of semiconductor manufacturing equipment maker KLA Corporation (NASDAQ: KLAC) jumped 4.3% in the afternoon session after a broad rally in chipmaker stocks occurred as Advanced Micro Devices (AMD) announced a significant deal with OpenAI. 

The agreement involved OpenAI deploying 6 gigawatts of AMD's GPUs over several years. Additionally, OpenAI received a warrant for up to 160 million shares of AMD stock. This news sparked a widespread surge across the AI-infrastructure and semiconductor sectors. KLA Corp was among the companies that benefited from the positive industry sentiment, along with others like Super Micro Computer, Marvell Technology, and Lam Research, which all saw their shares climb.

The shares closed the day at $1,139, up 3.5% from previous close.

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What Is The Market Telling Us

KLA Corporation’s shares are somewhat volatile and have had 12 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 biggest move we wrote about over the last year was 6 months ago when the stock dropped 8% on the news that stocks gave back some of the gains from the previous day as the White House clarified the tariffs on imports from China would add up to 145%, while the baseline 10% tariffs remained in place for all countries. 

This reminded markets that the global trade environment remained volatile, limiting the potential for sustained gains. Also, President Trump said he was willing to accept pain in the short term, and was aware his policies could cause a recession, but he remained more mindful of a more severe case of economic depression (higher unemployment and prolonged downturn). For investors, this suggested that the administration could prioritize long-term structural shifts over near-term economic stability, further increasing policy-driven risk in the markets.

KLA Corporation is up 79% since the beginning of the year, and at $1,140 per share, has set a new 52-week high. Investors who bought $1,000 worth of KLA Corporation’s shares 5 years ago would now be looking at an investment worth $5,703.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.