A better-than-feared quarterly report from South Korea-based Samsung Electronics lifted semiconductor stocks on Thursday. The downtrodden chip sector was due for a rebound because investor sentiment has been so negative lately, one Wall Street analyst said.
Samsung said its second-quarter revenue grew 21% from the same period last year, while operating profit rose 11%. Samsung's shares in Seoul climbed 3.2% on the news, the Wall Street Journal reported. The tech conglomerate makes smartphones, televisions, appliances, memory chips and other electronics.
However, Samsung faces challenges ahead, including rising inflation and slowing consumer and enterprise tech spending, analysts said.
Mizhuo trading desk analyst Jordan Klein said Samsung's results were "less bad that feared." Investors had been "bracing for much worse," he said in a note to clients. Samsung's revenue was roughly in line with estimates but its operating profit came in modestly below views.
Semiconductor Stocks Could See Short-Term Rally
Semiconductor stocks have been "oversold, with sentiment and positioning too bearish," Klein said. The sector could see a short-term rally amid a potential short squeeze heading into second-quarter earnings season, he said.
On the stock market today, the Philadelphia semiconductor index, known as SOX, rose 4.5%. The SOX includes the 30 largest semiconductor stocks traded in the U.S.
Among major semiconductor stocks, Taiwan Semiconductor Manufacturing rose 6.7% to 80.65. Intel climbed 3.1% to 38.14. Texas Instruments advanced 2.6% to 154.69. Nvidia increased 4.8% to 158.58. Advanced Micro Devices added 5.2% to 79.30.
The biggest gainers among semiconductor stocks included Onsemi, Impinj and Ambarella. Onsemi surged 9.2% to 52.01. Impinj popped 7.8% to 65.16. Ambarella jumped 7.7% to 69.42.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
