The chip rally has been Nvidia's story. NXP just made a different one. The Dutch chipmaker, best known for the chips inside cars and factory equipment, posted a Q1 beat that sent its stock to its biggest one-day gain in 16 years and pulled investors into a corner of the AI build-out most of them ignore.
NXP shares rose 26% Wednesday, the company's best day since going public in 2010.
NXP reported adjusted earnings of $3.05 per share, ahead of the $2.95 LSEG estimate. Revenue came in at $3.18 billion, up 12% year over year and beating the $3.16 billion forecast.
CEO Rafael Sotomayor pointed to "industrial and automotive processing that supports software-defined vehicles and physical AI" as the main growth driver. NXP does not make GPUs like Nvidia or AMD. Its chips power what data centers need behind the compute layer, including controllers for power, cooling, and security systems.
"As data center scales, the constraints are not just compute and memory," Sotomayor said on the earnings call. "They're also power, cooling, uptime, secure controls, and I think this is where NXP plays."
NXP's data center business reported about $200 million in revenue last year, Sotomayor said. He told investors he expects more than $500 million in 2026, more than double in a year.
That is the line that turned the report into a 26% move. NXP is now telling investors it is part of the AI infrastructure trade, not just an auto-chip cyclical.
Wall Street moved its targets in response. TD Cowen raised its price target from $250 to $310. Morgan Stanley lifted its target from $299 to $335. Morgan Stanley analyst Joseph Moore wrote that NXP "clearly signaled the confidence and clarity needed to support the long-term story, one we have believed in, with clearer visibility now around execution."
The broader semiconductor trade is on a tear. The VanEck Semiconductor ETF (SMH) has climbed about 30% in April alone. NXP's quarter shows that even chip companies that sit outside the GPU race are benefiting. The next test is whether the data center revenue ramp lands in line with the new $500 million target.