(Reuters) – Nvidia shares hit a record high amid a rally in U.S. chip stocks on Thursday after strong sales forecasts from industry barometer TSMC bolstered expectations Investor optimism about demand for processors used to power artificial intelligence applications.
Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, raised its expectations for annual revenue growth and said AI chip sales would make up an average percentage of its revenue. business for the entire year.
US-listed TSMC shares rose more than 11%, pushing the company’s market capitalization above $1 trillion.
The forecast from the leading producer of advanced AI chips boosted investor confidence in the prospects of chipmakers whose market value has soared over the past two years due to a surge in chip spending by majors technology companies.
TSMC customer and AI chip leader Nvidia rose nearly 4% to a record high of $140.89, before paring its gains to trade up 2% in after-hours trading. -noon. Its smaller rival, AMD, gained almost 1%, while Broadcom, Qualcomm and Micron gained between 1% and 3.6%.
“Nvidia is one of TSMC’s largest customers, so there is a direct flow-through to the US chip company in the Taiwanese company’s results,” 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 try to challenge TSMC in advanced contract manufacturing – an endeavor that analysts say will take years.
TSMC’s outlook also offered some respite to investors after large forecast cuts from chipmaking equipment giant ASML raised fears of a slower-than-expected recovery in demand for semiconductors not used in the AI.
“Luckily, all is well in AI land,” Coatsworth said. “TSMC said demand was strong for both AI-related businesses and smartphones, implying that the chip sector is still vibrant.”
US-listed TSMC shares have doubled this year, while Nvidia has surged 180%, as investors pour billions of dollars into chip stocks amid booming pick-and-shovel trading on Wall Street .
(Reporting by Arsheeya Bajwa in Bengaluru; additional reporting by Akash Sriram; editing by Maju Samuel and Alan Barona)