Nvidia, AMD Propel Semiconductor Sector to Highest Close Since February
In a significant boost for the semiconductor sector, stocks surged to their highest close since February, largely fueled by momentum from the newly reached U.S.-China trade agreement. Notably, the PHLX Semiconductor Index, which tracks 30 of the largest semiconductor firms in the U.S., reported a remarkable **7% gain** at the market’s close on Monday, achieving a closing value of $4,780.93. This is a substantial improvement, although it still remains **19% lower** than its all-time high of $5,904.54 from July 2024, according to data compiled by Dow Jones Market Data.
Trade Agreement Sparks Optimism in the Market
The recent agreement between U.S. and Chinese officials to cut tariffs has reinvigorated the semiconductor industry. As part of this deal, the U.S. is set to reduce tariffs on Chinese goods from **145% to 30%**, while China will lower its tariffs on U.S. goods from **125% to 10%** for a 90-day trial period. Analysts from Wedbush emphasize that this agreement is merely the beginning of broader negotiations aimed at further reducing tariffs, suggesting that “new highs for the market and tech stocks are now on the table” for the remainder of 2025. They believe that the considerable tariff reductions at this time likely alleviate recession fears temporarily.
Key Performers in the Semiconductor Sector
This surge in the semiconductor sector was reflected in the stock prices of major players. Personal computer and smartphone component suppliers benefited significantly, with:
- Nvidia Corp. (NVDA) rising by **5.4%**
- Advanced Micro Devices Inc. (AMD) climbing **5.1%**
- Broadcom Inc. (AVGO) increasing by **6.4%**
- Qualcomm Inc. (QCOM) advancing **4.8%**
- Lattice Semiconductor Corp. (LSCC) leading gains at **12.8%**
- Intel Corp. (INTC) seeing the smallest increase at **3.5%**
The aggregate market capitalization of Nvidia and the group known as the “Magnificent Seven” surged by over $830 billion following the trade agreement, with Nvidia itself contributing substantially by adding $155 billion to its market cap.
Analysts’ Outlook for Nvidia and Semiconductor Stocks
Amid this market rally, analysts at Melius Research retain an optimistic stance on Nvidia’s stock, stating that the increased clarity regarding tariffs and trade dynamics with China renders the company more **“investable.”** Despite this positivity, they cautioned about an impending decision by President Donald Trump regarding imports of semiconductors under Section 232 of the Trade Expansion Act, which could disrupt certain supply chains temporarily.
In a recent note, Melius analysts suggested that investors should go “back to fundamentals” with Nvidia. They highlighted the company’s declining stock price-to-earnings ratio, which is near a **five-year low**, and emphasized that every technological advancement requires an “accelerator.” This suggests a renewed focus on underlying financial fundamentals as a gauge for Nvidia’s future performance.
Conclusion: A Promising Outlook for the Semiconductor Sector
Overall, the recent trade agreement has granted a temporary lifeline to the semiconductor sector, propelling both Nvidia and AMD, along with other prominent tech stocks, back into the spotlight. As the market closely monitors further negotiations between the U.S. and China, analysts predict that this momentum could sustain further gains, allowing for an optimistic year ahead in the tech sector. With the potential for decreasing tariffs and increasing investor confidence, the semiconductor industry appears to be poised for a significant resurgence as it navigates through the complexities of trade relations and market demands.
