The share of Nvidia reached a new peak on Thursday as the rally of semiconductor stocks gained strength in the United States after Taiwan Semiconductor Manufacturing Co. upgraded its forecast for annual revenue growth and said it expects AI-related chips to account for a mid-teen percentage of its full-year revenue. TSMC, the world’s largest contract chipmaker, revealed a relatively high market share of 92% in its third-quarter business report, up from 86% recorded in the same quarter last year.
The hearty forecast from TSMC, a leading player in the production of leading-edge chips for artificial intelligence, quieted investors about the potential demand for processors driving a wave of optimism across the chip sector. The company’s shares, which are listed on U.S. exchanges, rose by over 11%, boosting the firm’s market capitalization to more than $1 trillion.
The stock saw Nvidia, a huge buyer of TSMC and an industry leader in development of sophisticated processors, surge almost 4% to an all-time high of $140.89 before retreating slightly, and is still trading up 2% in the afternoon session. This year alone, the stock has jumped an astonishing 180% as investor enthusiasm continues to build, fueled by its role in the semiconductor business boom. AMD, Broadcom, Qualcomm and Micron were also up by as much as 1% to 3.6% as the rally also extended into other key players in the sector.
The performance of Nvidia is also closely tied in with the results of TSMC, as being one of the top clients of TSMC, noted investment analyst Dan Coatsworth at AJ Bell. A positive report on the outlook of TSMC directly translates to the stock price of Nvidia, which also more generally reflects confidence in the U.S.-based chipmaker.
Even beleaguered chipmaker Intel saw its stock price rise 1%. Intel has been opening manufacturing lines with a vengeance, hoping to close the gap with TSMC in the contract manufacturing business. Analysts, however, warn that it will take several years for Intel to close that gap.
TSMC’s upbeat forecast brought some relief to investors who had been rattled a few days back by warnings issued from chipmaking equipment company ASML-a company that had been sounding alarm bells about the potential slowdown in semiconductor demand outside of AI applications.
Still, TSMC’s strong sales both for AI and smartphone-related segments give the impression that the semiconductor market has indeed held on to its growth momentum. And that rally continues to reflect the strength the chip sector is maintaining, with companies like Nvidia continuing to attract a sustained flow of orders for advanced processors.
