The iShares PHLX Semiconductor ETFs (SOXX) and VanEck Vectors Semiconductor ETF (SMH) increased by 0.5% and 0.7%, respectively, on Thursday. Invesco PHLX semiconductor ETFs (SOXQ) increased by 1%.
This after Nvidia Corp’s stock rallied, investors upgraded the stock after their solid quarterly earnings. The semiconductor sector got a lift from this.
Meanwhile, Nvidia shares were 3.5% higher. NVDA makes up 9.7% of SMH’s underlying portfolio, 9.4% of SOXQ, and 9.3% of SOXX.
Nvidia has an estimated revenue of $6.66 billion to $6.94 billion, higher than Wall Street’s estimations. An increase in data-centre sales made up $500 million, and new record sales in gaming and data-centre sales.
However, the demand for GPUs, graphics processing units used in cryptocurrency mining, was analysts’ focus. But it did not cause an impact on the outlook.
But analysts were relieved that there was a lack of interest in crypto mining since there was a decline in crypto values which caused the mining to slow down and miners to reduce their GPU operations.
Meanwhile, Nvidia is experimenting with Cryptocurrency mining processors (CMPs), an alternative to graphics processing units that were more for personal computers.
Nvidia’s Arm acquisition delayed
In other news, Nvidia is in the process of acquiring Arm, but the UK government has paused the acquisition due to national security concerns. The deal, which is worth $40 billion, is the largest in the semiconductor industry. And is a move for Nvidia to advance in artificial intelligence and the Internet of Things.
Arm is of Japan’s SoftBank Group Corp, a leading global semiconductor manufacturer. Arm is based in Cambridge, UK, and its core business is CPUs. SoftBank acquired Arm in 2016, and it was valued at $32 billion.
Arm’s core business is chips designs for mobile phones; thereby, the acquisition would give Nvidia a significant edge. Other players in the industry who raised concerns over this monopoly is Apple, Microsoft and Chinese firms led by Huawei’s semiconductor subsidiary HiSilicon.
The UK’s CMA has issued a report to the government wherein it raised concerns around risk to national security. This investigation is believed to be continued, and the Arm acquisition has been delayed.