Taiwan Semiconductor Manufacturing Company, recognized as the largest contract chipmaker globally, has increased its annual revenue growth expectations, indicating that sales from AI chips will represent a mid-teen percentage of its total revenue for the year.
This optimistic outlook from a key player in advanced AI chip production has strengthened investor sentiment towards chipmakers, whose market valuations have surged over the past two years due to heightened chip investments from major technology firms.
Shares of TSMC listed in the U.S. rose by 7%, positioning the company's market capitalization to potentially exceed $1 trillion if these premarket gains are maintained.
Nvidia (NVDA), a leading AI chip manufacturer and TSMC client, along with smaller competitor AMD (AMD), both saw their stock prices increase by over 2%. Other companies, including networking chipmaker Broadcom (AVGO), smartphone semiconductor manufacturer Qualcomm (QCOM), and memory chip supplier Micron (MU), experienced gains ranging from 1.5% to 3%.
Intel (INTC), a chipmaker facing challenges, also saw a slight increase in its stock price. The company has been investing in expanding its chip fabrication capabilities to compete with TSMC in advanced contract manufacturing, a process that analysts believe will take several years to materialize.
TSMC's positive forecast provided some relief to investors following significant forecast reductions from chipmaking equipment leader ASML, which raised concerns about a slower-than-anticipated recovery in demand for non-AI semiconductors.
So far this year, TSMC's shares listed in the U.S. have risen by over 80%, while Nvidia's stock has more than doubled, as investors continue to inject billions into semiconductor stocks amid Wall Street's thriving picks-and-shovels investment strategy.