What Happened?
A number of stocks jumped in the afternoon session after industry leader and peer AMD reported strong earnings, confirming that AI infrastructure spending is real.
AMD's Data Center revenue rose 57% year over year to $5.8 billion, beating estimates by $400 million. Chip companies sell into a supply chain: raw materials become wafers, wafers become chips, chips go into servers and devices. AI is currently driving nearly all of the industry's growth because building AI systems requires massive amounts of specialized chips, graphics processors and high-bandwidth memory in particular.
When a major chip company reports strong AI data center sales, it signals that the large technology companies building AI infrastructure, called hyperscalers, are still spending heavily. That spending flows through the entire supply chain, from wafer makers to packaging companies to the chip designers themselves.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Semiconductor Manufacturing company Lam Research (NASDAQ: LRCX) jumped 7.2%. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company IPG Photonics (NASDAQ: IPGP) jumped 8.6%. Is now the time to buy IPG Photonics? Access our full analysis report here, it’s free.
Zooming In On IPG Photonics (IPGP)
IPG Photonics’s shares are very volatile and have had 22 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 24.4% on the news that the company reported first-quarter results that missed profit expectations and provided weak guidance for the upcoming quarter, overshadowing a revenue beat.
Although revenue for the quarter grew by 16.6% year-over-year to $265.5 million, surpassing Wall Street forecasts, the company’s profitability did not meet expectations. Adjusted earnings per share came in at $0.29, falling short of the $0.31 analyst consensus estimate. The company’s gross margin also declined compared to the same quarter in the previous year.
Looking ahead, IPG Photonics projected its adjusted earnings for the second quarter to be below what analysts were anticipating. For instance, the midpoint of its guidance for adjusted earnings per share was $0.40, while analysts had estimated $0.43. This combination of a current profit miss and a weaker-than-expected outlook for future earnings prompted a significant sell-off by investors.
IPG Photonics is up 31.3% since the beginning of the year, but at $98.30 per share, it is still trading 36.1% below its 52-week high of $153.91 from February 2026. Despite the year-to-date gain, investors who bought $1,000 worth of IPG Photonics’s shares 5 years ago would now be looking at only $498.12.
ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all.
Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE.
