Nvidia Corporation (NASDAQ:NVDA) handed Amkor Technology, Inc. (NASDAQ:AMKR) a massive vote of confidence on July 23. The companies announced a $1.5 billion multi-year advanced packaging and development agreement, with Nvidia Corporation (NASDAQ:NVDA) committing a prepayment to support Amkor’s U.S. advanced packaging capacity. Five days later, the stock plunged almost 25% in a single session.
Nvidia Is Backing Amkor’s U.S. Packaging Buildout
Nvidia and Amkor will work on advanced packaging and test technologies for next-generation AI and accelerated computing systems, including high-density interconnects and heterogeneous integration.
The agreement supports Amkor’s expansion in Arizona, where the company is building a major U.S. advanced packaging campus. As AI chips become more complex, packaging becomes a larger part of the manufacturing challenge, especially for systems combining multiple dies, memory and advanced interconnects.
Amkor’s results are already moving in the right direction, as Q2 sales rose 26% year over year to a record $1.90 billion, with record revenue in Computing as well as Automotive & Industrial. Gross margin improved to 16.8% from 12.0% a year earlier, and diluted EPS reached $0.70.
Wall Street Hated the Near-Term Setup
After the July 27 earnings report, investors punished the stock as Q3 sales guidance came in at $1.95 billion to $2.05 billion and concerns persisted around program timing and end-market volatility.
B. Riley analyst Craig Ellis kept a Neutral rating and cut his price target from $75 to $65. Amkor Technology, Inc. (NASDAQ:AMKR) also expects $2.5 billion to $3.0 billion of capital expenditures this year.
That spending creates a risk because if utilization ramps more slowly than expected, Amkor could be carrying an enormous investment base before the returns arrive.
Hedge Funds Added Exposure
Insider Monkey’s database showed 57 hedge funds held AMKR at the end of Q2 2026, up from 49 in Q1 2026. AQR Capital Management remained the largest listed hedge fund holder with 3.23 million shares after trimming its position 1%. Point72 cut its stake 18%, while Citadel Investment Group increased its position 425% to just over 1.0 million shares.
As of July 31, 8.93 million Amkor shares were sold short, equal to 4.88% of public float, with 1.2 days to cover. Amkor issued $1.15 billion of 0% convertible notes in May, and its latest filing says conversion-related activity and hedge adjustments can encourage short selling.
The Bottom Line
The 25% collapse looks harsher than the story beneath it warrants. Amkor is spending aggressively and near-term guidance gave investors reasons to worry, but Nvidia has committed prepayment behind the U.S. capacity it wants Amkor to create. That is a powerful endorsement of both the demand and the strategic value of Amkor’s advanced packaging footprint. The selloff reset expectations without really breaking the AI thesis.
READ NEXT: NVIDIA (NVDA): What Foxconn and Super Micro Are Telling Us about the AI Boom and Pony AI Is Scaling Robotaxis Fast—Can the Stock Reach BofA’s $17 Target?
Disclosure: None. Follow Insider Monkey on Google News.
Hedge Fund Resource Center