Nvidia, AMD and other chip stocks rebound. Is the 'violent' AI selloff over?

By Hannah Pedone

Analysts warn of further volatility ahead, though there are two new factors that work in the AI trade's favor

Shares of Nvidia, led by Jensen Huang, are bouncing on Friday.

Shares of key chip companies were rebounding on Friday from the sector's worst selloff in six years.

Shares of Micron Technology (MU), Nvidia (NVDA) and Intel (INTC) were up more than 5% shortly after the open, while shares of Advanced Micro Devices (AMD) were up 11%. Shares of Sandisk (SNDK) were up 7% and Broadcom's stock (AVGO) was up 4%.

StoneX analyst Yi Fu Lee told MarketWatch that Thursday's "violent" selloff created an "obvious reflex opportunity" among AI-exposed chip stocks on Friday. He pointed out that the iShares Semiconductor ETF SOX fell 12% on Thursday, whereas the iShares Expanded Tech-Software Sector ETF IGV was under pressure as well but only fell 4%.

Stifel analyst Brian Chin labeled Friday's action a "volatility whipsaw" reaction. Chip stocks are bouncing, but the uncertainty around future data-center spending probably isn't going away, which he noted could keep stocks volatile for some time.

See also: Marvell and Lumentum shareholders unite in panning merger deal: 'It's a trash offer'

Yet investors can take comfort that the "underlying appetite" for artificial intelligence has not changed since the midterms. Rather, the regulatory pathway has "become more tricky," he said.

There were two positive developments on that front since Thursday's close. One was better-than-feared messaging from Texas Governor-elect Gina Hinojosa, who promised a tougher approach to data-center regulation while campaigning.

"I'm not ruling data centers out," she said in an interview with CNN on Thursday. "It's not that I hate data centers. We just need to stop what we are doing until we have protections for Texans."

The other bit of good news was the Wall Street Journal's reporting that Anthropic exceeded $80 billion in annual recurring revenue at the end of October. That was above where the company was at the end of September, according to the report, though the story also noted that some Anthropic investors think the company's target IPO valuation needs to come down from $1.5 trillion.

All told, investors may want to buckle up for a bumpy ride. Lee said it's not wise to make "irrational portfolio decisions" during a "violent tape."

-Hannah Pedone

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11-06-26 1048ET