What Happened?

A number of stocks jumped in the afternoon session after the semiconductor sector received a major boost as Advanced Micro Devices (AMD) secured a deal to sell up to US$60 billion in artificial intelligence chips to Meta Platforms over five years. 

This landmark agreement, which also allows Meta to purchase as much as 10% of the chip firm, is one of the latest blockbuster deals in the artificial intelligence space, signaling massive investment by tech giants. The news prompted a significant rally in AMD's shares, which jumped more than 10% in premarket trading. The deal not only highlights the immense demand for specialized AI hardware but also contributed to a broader rebound in technology stocks, helping to ease recent investor fears about the disruptive impacts of AI.

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 Amtech (NASDAQ: ASYS) jumped 3.6%. Is now the time to buy Amtech? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company Photronics (NASDAQ: PLAB) jumped 3.8%. Is now the time to buy Photronics? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company FormFactor (NASDAQ: FORM) jumped 4.4%. Is now the time to buy FormFactor? Access our full analysis report here, it’s free.
• Analog Semiconductors company Magnachip (NYSE: MX) jumped 8.5%. Is now the time to buy Magnachip? Access our full analysis report here, it’s free.

Zooming In On Magnachip (MX)

Magnachip’s shares are extremely volatile and have had 30 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 biggest move we wrote about over the last year was 7 months ago when the stock dropped 24.6% on the news that the company issued a weak financial outlook for the third quarter and lowered its full-year revenue forecast. The disappointing guidance overshadowed second-quarter results that beat analyst expectations. For the upcoming third quarter, Magnachip projected revenue between $44 million and $48 million, far below the consensus estimate of $54.2 million. The company also slashed its full-year outlook from single-digit growth to flat revenue, blaming a difficult macroeconomic environment and tariff uncertainty. This news coincided with a broader market sell-off after a weak U.S. jobs report and new tariff announcements rattled investors, particularly in the semiconductor sector. Following the report, at least one analyst lowered their price target on the stock.

Magnachip is down 1.7% since the beginning of the year, and at $2.64 per share, it is trading 47.5% below its 52-week high of $5.02 from February 2025. Investors who bought $1,000 worth of Magnachip’s shares 5 years ago would now be looking at an investment worth $138.47.

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