NEW YORK — Nvidia (NVDA) shares closed up 2.95% at $210.69 on Thursday, just ahead of the Juneteenth market closure, as investors rotated back into semiconductor stocks. The chipmaker saw heavy trading volume of approximately 241 million shares, underscoring its outsized influence on the broader market.
Market Movers
The Nasdaq Composite rose 2.43% for the holiday-shortened week, propelled by a broad bounce in the semiconductor sector. The Philadelphia Semiconductor Index surged 6.4% on Thursday alone, while the S&P 500 gained 0.93% and the Dow Jones Industrial Average added 0.71%. Thursday's trading was also influenced by the quarterly "triple witching" expiration of stock options, index options, and futures.
Nvidia's market capitalization now stands at nearly $5.1 trillion, making it a major driver of both the Nasdaq and S&P 500. Any significant move in the stock can sway the indices, reinforcing its role as a bellwether for AI spending.
Chip Sector Rally
Nvidia was not alone in its advance. Intel (INTC) soared 10.6% after former President Donald Trump announced a partnership between Apple (AAPL) and Intel for U.S. chip design and production. Other chip names also gained, with the sector benefiting from renewed investor confidence in AI-related demand.
Tony Welch of SignatureFD noted that the "package of data remains still supportive," while Eric Johnston of Cantor Fitzgerald pointed to the Federal Reserve gaining "more credibility around inflation."
Infrastructure Investments
Nvidia is backing its AI ambitions with tangible investments. The company, along with Coherent (COHR), kicked off a $2 billion AI infrastructure expansion in Sherman, Texas. Nvidia CEO Jensen Huang described these AI "factories" as the "infrastructure of the new industrial revolution." Coherent CEO Jim Anderson also highlighted "tremendous AI demand" driving the expansion.
Upcoming Earnings Test
Micron Technology (MU) is set to report its fiscal third-quarter earnings on June 24, offering a critical check on the AI spending narrative. The memory chipmaker's pricing, supply, and capital expenditure plans will be closely watched. Deutsche Bank analyst Melissa Weathers told MarketWatch she anticipates a memory chip glut persisting into 2028, adding a note of caution.
Memory chips like Micron's are integral to AI server systems, often paired with Nvidia processors. The earnings report could either reinforce or challenge the current bullish sentiment around AI infrastructure.
Broader Context and Risks
Despite the upbeat momentum, risks remain. Interest rate concerns persist, and political pressure is mounting over energy consumption, job displacement, and security risks tied to AI. Huang acknowledged the need for some rules and safety standards but argued that wider AI adoption would ultimately create more jobs.
Amazon's (AMZN) AWS is reportedly looking to expand sales of its Trainium AI chips, as noted by Barron's, indicating that Nvidia's largest customers are exploring ways to reduce dependence on its systems. This dynamic adds a layer of competitive pressure.
Oil prices eased, providing a tailwind for equities, but the sustainability of the chip rally will be tested when markets reopen on Monday. Whether Thursday's bounce was merely a pre-holiday positioning or the start of a sustained uptrend should become clearer after the weekend.
