Lam Research and Nova Shares Are Soaring, What You Need To Know

What Happened?

A number of stocks jumped in the afternoon session after a cooler-than-expected June inflation report and a surprise capital expenditure warning from IBM appeared to validate AI hardware demand. 

June core CPI printed flat month-over-month (2.6% year-over-year versus a 2.9% forecast), reopening the door to a friendlier interest rate environment. Also, IBM CEO Arvind Krishna revealed in a letter that IBM's second-quarter revenue missed expectations because clients abruptly shifted their enterprise budgets toward servers, storage, and memory to secure supply-constrained AI infrastructure ahead of expected price hikes.

The combination of a macro tailwind and a fundamental read-through provided a strong setup for chip stocks. The soft inflation print lowers the discount rate, which benefits high-multiple semiconductor valuations. More importantly, IBM's warning acts as direct confirmation that AI infrastructure spending is not slowing down. Instead, it suggests that hardware purchases are actively crowding out enterprise software budgets. 

The specific mention of "memory" purchases by IBM's CEO likely explains the outsized reaction in Micron and SanDisk. While geopolitical risks remain elevated following renewed U.S.-Iran conflict, the market appears to be treating the IBM commentary as a strong fundamental signal ahead of Taiwan Semiconductor Manufacturing Company's (TSMC) earnings later in the week. 

Adding to the optimism, several companies announced significant capital investments to expand manufacturing capacity for advanced chips. Driven by the explosive growth in artificial intelligence and high-performance computing, chipmakers are scaling up their operations. Intel announced a €5 billion ($5.7 billion) investment in its Ireland facility to boost production of its Xeon 6 processors. Similarly, Tower Semiconductor is expanding its 300mm manufacturing capabilities in Japan with government support to meet long-term customer demand.

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 4.7%. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company Nova (NASDAQ:NVMI) jumped 4.9%. Is now the time to buy Nova? Access our full analysis report here, it’s free.

Zooming In On Nova (NVMI)

Nova’s shares are extremely volatile and have had 38 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 5.3% on the news that investors took profits following the chip sector's strong rally in the first half of the year as Middle East tensions escalated. 

SK Hynix shares fell over 5% in South Korea following its strong Nasdaq debut the previous week. 

The selloff dragged down memory peers like Micron Technology and SanDisk. Adding to the weakness for memory stocks, a South Korean brokerage lowered its second-quarter earnings forecast for SK Hynix. Brokerage firm KIS projected SK Hynix's second-quarter operating profit at 60.4 trillion won, roughly 8% below the 65 trillion won market consensus. 

The expected miss stems from the company's heavy reliance on long-term contracts for its premium High Bandwidth Memory (HBM) chips, a structure that effectively locked the manufacturer out of recent 30% to 50% price surges in the broader spot market. It is natural to assume that selling more premium AI chips would immediately expand profit margins. 

However, HBM economics work differently than standard memory. Because these advanced chips require massive upfront capital, they are typically sold through multi-year agreements that fix the price. Standard DRAM and NAND chips, by contrast, trade on the spot market where prices move freely. Consequently, SK Hynix's heavy exposure to premium, fixed-price contracts placed a near-term ceiling on its pricing power even as broader market prices spiked. 

This revelation triggered a reassessment across a memory sector priced for perfection, accelerating profit-taking among investors who were already questioning the durability of AI capital spending. Adding to the defensive positioning, renewed tensions in the Middle East, including reports of US military action against Iran, pushed oil higher and encouraged a shift toward safer assets.

Nova is up 36.5% since the beginning of the year, but at $474.07 per share, it is still trading 15.3% below its 52-week high of $559.62 from June 2026. Investors who bought $1,000 worth of Nova’s shares 5 years ago would now be looking at an investment worth $4,903.

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