What Happened?
A number of stocks jumped in the afternoon session after semiconductor stocks rebounded amid dip buying following a recent selloff, as reports revealed that China may ease restrictions on advanced Nvidia AI chip imports.
Following sessions of profit-taking that dragged down the entire sector, semiconductor stocks rebounded strongly. The reversal was triggered by a report from The Information that Chinese authorities recently informed top technology companies, including Alibaba, ByteDance, and DeepSeek, that they may soon receive permission to purchase a limited quantity (capped under 200,000 units) of Nvidia's H200 AI processors for model training.
Supporting the improved outlook for chip stocks, reports revealed that SK Hynix's $24.5 billion U.S. ADR offering was oversubscribed by more than seven times, proving that institutional appetite for AI memory chips remains highly robust.
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 Applied Materials (NASDAQ: AMAT) jumped 5%. Is now the time to buy Applied Materials? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company KLA Corporation (NASDAQ: KLAC) jumped 5.3%. Is now the time to buy KLA Corporation? Access our full analysis report here, it’s free.
Zooming In On KLA Corporation (KLAC)
KLA Corporation’s shares are very volatile and have had 26 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 2 days ago when the stock dropped 8.4% on the news that Samsung Electronics' record quarterly profit triggered a textbook "sell-the-news" reaction, compounded by a Reuters report that China's DeepSeek is developing its own AI inference chip.
Samsung's preliminary Q2 operating profit of 89.4tr won ($58.4B) surged 1,810% year-over-year, with revenue up 129% to 171tr won, beating consensus. Memory names had run enormously into the report so a blowout that merely confirmed the AI memory supercycle gave holders every reason to lock in gains suggesting the good news was already in the price.
Second, DeepSeek's chip revived the structural fear that custom silicon erodes Nvidia's moat. The project is early-stage and constrained by US export controls on advanced foundries and high-bandwidth memory, but it stacks onto OpenAI's Broadcom-built "Jalapeño" inference chip and Anthropic's early talks with Samsung on a 2nm accelerator, a pattern of AI labs designing around Nvidia over time.
Lastly, there is the AI-bubble question: Morgan Stanley told clients earlier in the week the rally was "nearing its end," expecting "more capex discipline." Risks ahead include SK Hynix's ~$28bn Nasdaq debut which could pull institutional capital from Micron and related peers, while heavy insider selling and Michael Burry's disclosed MU short added overhangs.
KLA Corporation is up 80.9% since the beginning of the year, and at $230.59 per share, it is trading close to its 52-week high of $241.16 from June 2026. Investors who bought $1,000 worth of KLA Corporation’s shares 5 years ago would now be looking at an investment worth $7,468.
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