(Reuters) – A strong sales forecast from industry leader TSMC boosted investor optimism about demand for processors used to power artificial intelligence applications, driving a rise in U.S. chip stocks on Thursday. Meanwhile, Nvidia’s stock price hit an all-time high.
Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker, raised expectations for annual sales growth, saying AI chip sales would account for mid-teens of full-year sales.
U.S.-listed TSMC shares rose more than 11%, pushing the company’s market capitalization to more than $1 trillion.
The forecast from a major maker of advanced AI chips has strengthened investors’ confidence in the outlook for the chipmaker, whose market value has soared over the past two years due to a surge in chip spending by Big Tech.
Nvidia, a TSMC customer and front-runner in AI chips, rose about 4% to a record high of $140.89 and was trading 2% higher in afternoon trading, net of gains. Smaller rival AMD rose nearly 1%, while Broadcom, Qualcomm and Micron rose 1% to 3.6%.
“NVIDIA is one of TSMC’s major customers, so the influence of U.S. semiconductor companies can be directly seen in the Taiwanese company’s performance,” said Dan Coatsworth, investment analyst at AJ Bell.
Shares of struggling chipmaker Intel also rose 1%. Intel has been expanding its chip manufacturing facilities to challenge TSMC in advanced contract manufacturing, but analysts expect this to take years.
TSMC’s outlook gives investors some respite after a sharp forecast cut by semiconductor manufacturing equipment giant ASML raised concerns that demand for semiconductors for non-AI applications will recover more slowly than expected. Ta.
“Fortunately, all is well in the world of AI,” Coatsworth said. “TSMC said demand for both AI-related businesses and smartphones is strong, suggesting the chip sector still has momentum.”
TSMC’s U.S.-listed stock has doubled this year and Nvidia has soared 180% as investors pour billions into chip stocks as Wall Street bargains boom.
(Reporting by Arsheeya Bajwa in Bengaluru; Additional reporting by Akash Sriram; Editing by Maju Samuel and Alan Barona)
