$NVIDIA (NVDA.US)$On volatile trading days, the stock price of led the semiconductor sector to rise, while the stock prices of other well-known semiconductor companies continued their recent weak trend.

NVIDIA's stock price rose 2% in Thursday's afternoon trading, rebounding from a brief decline, although it is off its highs. As of press time, NVIDIA pre-market trading fell 0.29% to $120.74.

However, the entire semiconductor sector is still under pressure,$PHLX Semiconductor Index (.SOX.US)$falling 0.8% and further widening the 6.8% drop on Wednesday. This is the largest single-day drop since March 18, 2020, when the index fell 9.8%.

Some well-known companies in the sector experienced the biggest drops.$Micron Technology (MU.US)$fell 3.5%,$Super Micro Computer (SMCI.US)$fell 3.0%,$Advanced Micro Devices (AMD.US)$fell 3.4%.

Even so, 's latest financial report still confirmed significant growth in demand for AI.$Taiwan Semiconductor (TSM.US)$However, Cantor's Muse said that Taiwan Semiconductor provided a "reliable report that should alleviate concerns about yesterday's decline due to Trump's comments," adding that he "will increase positions after yesterday's large decline."

Cantor Fitzgerald analyst C.J. Muse wrote in a client note, "Artificial intelligence continues to drive massive growth as AI chip production capacity remains in short supply, and TSMC has brought its supply and demand balance viewpoint forward to at least 2026 from the end of 2024."

Jordan Klein, an analyst at Mizuho Securities, wrote earlier on Thursday that the semiconductor sector was not in good shape after TSMC released its report. He pointed out, "If stocks and industries continue to decline after this strong financial report and outlook are released, it shows us all we need to know—that semiconductor stocks may fall due to profit-taking in the next two to three weeks."

Wednesday's plunge reflected a variety of concerns about geopolitical issues. Trump told Bloomberg Businessweek in an interview, "Taiwan has taken approximately 100% of our chip business away from us" and "should pay us defense fees."

In addition, although many semiconductor stocks have been big winners this year, investors have been rotating out of high-flying stocks and buying into stocks seen as potential beneficiaries of a rate-cut cycle or a second term for Trump.

Robert Maire of Semiconductor Advisors wrote on Thursday, "The valuations of these stocks were never low to begin with. We have repeatedly pointed out that the stock market is overvalued and over-extended."

Arya added that the volatility in the industry provides investors with more opportunities to invest in companies with strong profitability, including Nvidia,

Bank of America analyst Vivek Arya recommends investors "focus on the fundamentals."

Arya and his team "understand the trend from AI/data center semiconductors to industrial/automotive/consumer, but this trend is not supported by fundamentals and is likely driven by short-term positioning," the BofA analyst wrote in a note to clients.

and other companies in the sector.$Broadcom (AVGO.US)$And.$Arm Holdings (ARM.US)$.

Edited by Jeffrey