Topline
Chip stocks rallied Thursday as the Taiwanese manufacturing partner for American artificial intelligence stalwart Nvidia reported blowout earnings, scoring a trillion-dollar valuation for the Asian firm as the generative AI bonanza continues to inspire new records on Wall Street.
The lobby of the TSMC facility in Phoenix last year.
Key Facts
“It’s just the beginning” for the “insane” demand for all things AI, C.C. Wei, the chief executive officer of Taiwan Semiconductor Manufacturing Co., said on his company’s third-quarter earnings call, according to FactSet’s translation of his comments.
New York-listed shares of TSMC shot up 12% to an all-time high of $209 after the company comfortably beat consensus analyst forecasts for third-quarter profit and sales, sending its market value to $1.08 trillion.
TSMC, which briefly eclipsed a $1 trillion market capitalization earlier this year but is on track to close above $1 trillion for the first time ever, becomes the ninth-company in the world in the trillion-dollar club, joining Apple, Nvidia, Microsoft, Alphabet, Amazon, Saudi Aramco, Meta and Berkshire Hathaway.
Shares of Nvidia, the best-known AI beneficiary, rose 4% to its highest intraday level ever, while several other U.S. semiconductor stocks including Advanced Micro Devices, Broadcom and Intel advanced more than 1.5%, lifting the U.S. indexes Dow Jones Industrial Average and the S&P 500 to intraday records.
Big Number
$257 billion. That’s how much the 10 largest constituent stocks in the iShares Semiconductor exchange-traded fund (SOXX), gained in market cap within about 20 minutes of market open, according to Yahoo Finance data.
Crucial Quote
Wei declared his company “probably gets the deepest and widest growth of anyone” from the AI gold rush as “almost every AI innovator” relies on TSMC to make its custom semiconductor chips. Apple and Nvidia, the two most valuable companies in the world, are top customers of TSMC, relying on the Taiwanese foundry to actually build its custom chips.
Key Background
Founded in 1987 by billionaire Morris Chang, TSMC stock has surged 96% year-to-date and more than 200% over the last two years as semiconductor stocks broadly rallied with the emergence of generative AI. The TSMC-led chip stock rally comes just two days after earnings from another non-U.S. titan in the industry, Dutch firm ASML, caused a selloff as it warned of “less gradual” demand growth for its manufacturing technology, a warning seemingly rendered less relevant for the industry by TSMC’s bumper earnings. On Thursday, TSMC’s market cap actually surpassed that of Berkshire Hathaway, the conglomerate led by centibillionaire Warren Buffett.
