US chip stocks rose even before the start of trading on Thursday after North Asian tech giant TSMC announced strong sales and a forecast that spurred investor anticipation.
Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, raised its expectation for annual revenue growth and said sales from AI chips would account for a mid-teen percentage of its full-year revenue.
That caused optimism about demand for processors used to power artificial intelligence applications.
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The forecast from the leading producer of advanced AI chips reinforced investor confidence in the outlook for chipmakers, whose market values have skyrocketed over the past two years due to a surge in chip spending by Big Tech.
TSMC’s US-listed shares rose 7%, with the company’s market capitalization set to cross $1 trillion if pre-market gains hold.
TSMC customer and AI chip frontrunner Nvidia and smaller rival AMD both gained more than 2%. Networking chipmaker Broadcom, smartphone semiconductor maker Qualcomm and memory chip provider Micron rose between 1.5% and 3%.
Struggling chipmaker Intel‘s shares were also edging higher. Intel has been expanding its chip fabrication facilities in an attempt to challenge TSMC in advanced contract manufacturing – an undertaking analysts expect will take years.
TSMC’s outlook also offered some respite to investors after deep forecast cuts from chipmaking equipment giant ASML sparked fears on Tuesday of a slower-than-expected recovery in demand for semiconductors not used in AI.
TSMC’s US-listed shares are up more than 80% so far this year, while Nvidia has risen over two-fold, as investors pour billions of dollars into semiconductor stocks amid Wall Street’s booming picks-and-shovels trade.
- Reuters with additional editing by Jim Pollard
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