Nvidia effect! Semiconductor-related stocks rise in India

Shares of semiconductor-related stocks witnessed a surge in buying on domestic bourses on Friday, tracking a record rally in U.S. chip design firm Nvidia on Wall Street overnight after it posted better than expected earnings, driven by strong demand for artificial intelligence (AI) chips. The record rally in Nvidia shares overnight seems to have a positive impact on semiconductor-related stocks in India, with companies such as ASM Technologies and SPEL Semiconductor rising up to 5%. Among others, Moschip Technologies, Dixon Technologies (India), Tata Elxsi gained up to 1%. On the other hand, Vedanta and Surana Solar were down in the range of 1-2%.

Santosh Meena, Head of Research, Swastika Investmart, says, “NVIDIA, the leader of the ongoing global bull market, is experiencing a notable surge post-earnings, buoyed further by robust management commentary. This positive momentum is not only boosting its value but also igniting a rally in other semiconductor stocks worldwide. Despite the absence of pure-play semiconductor companies in India, the shares of related entities are experiencing upward movement. However, it's essential for investors to exercise prudence and refrain from making impulsive decisions without conducting thorough analysis.”

In a historic stock market gain, Nvidia shares zoomed 16.4% to hit a new closing high of $785.38, adding about $277 billion to its market capitalisation and bringing its total market value to $1.94 trillion. The single-day gain in Nvidia stock was higher than the total market capitalisation of Reliance Industries, the country’s most valued firm, of $243 billion.

The surge in Nvidia's shares made it the third-most valuable company in the U.S. stock market, surpassing heavyweights such as Amazon and Alphabet, while it registered Wall Street's largest one-day gain of $277 billion, breaking the record of $197-billion rally made by Facebook-parent Meta on February 2 after it released December quarter results and declared its first dividend.

For the fourth quarter ended January 28, 2024, the California-based company posted revenue of $22.1 billion, up 22% from the previous quarter and 265% from a year ago. The GAAP earnings per diluted share was $4.93 apiece, up 33% QoQ and 765% from the same period last year. On the non-GAAP basis, earnings per diluted share stood at $5.16, up 28% from Q3 FY24 and up 486% from Q4 FY23.

For the full fiscal 2024, Nvidia’s revenue rose 126% to $60.9 billion, while GAAP and non-GAAP earnings per diluted shares were $11.93, up 586% YoY, and $12.96, up 288% from a year ago, respectively.

“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations,” said Jensen Huang, founder and CEO of Nvidia.

The company also announced that it will pay its next quarterly cash dividend of $0.04 per share on March 27, 2024, to all shareholders of record on March 6, 2024.

Segment wise, Nvidia recorded revenue of $18.4 billion from data center; $2.9 billion from gaming; $281 million from automotive; and $463 million from professional visualisation. The data center revenue grew 409% YoY, while the gaming business reported a growth of 56% from the same period last year. 

Going ahead, the company expects revenue to be $24 billion in FY25, while GAAP and non-GAAP gross margins are projected to be 76.3% and 77%, respectively. 

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)