Optimistic Outlook for Chip Manufacturers: NVIDIA on the Rise Following TSMC Forecast

The stocks of the U.S. semiconductor industry experienced a pre-market surge, fueled by the optimistic sales forecast of industry leader TSMC. The world's largest contract chip manufacturer, Taiwan Semiconductor Manufacturing Co., raised its expectations for annual revenue growth and predicted that revenue from AI chips would constitute a mid-double-digit percentage of its total annual revenue. This positive adjustment bolstered investor confidence in the prospects for chip manufacturers, whose market values have surged significantly over the past two years due to the sharply increased investments from big-tech companies. TSMC's US-listed shares rose by 7%, with the company's market capitalization potentially surpassing the billion-dollar mark, should the pre-market gains persist. TSMC customers and AI pioneers Nvidia and smaller rival AMD also increased by more than 2%. Network chipmaker Broadcom, smartphone semiconductor manufacturer Qualcomm, and memory chip supplier Micron rose between 1.5% and 3%. Even the beleaguered chipmaker Intel saw slight price increases. Intel is expanding its chip fabrication capacities to challenge TSMC in the field of advanced contract manufacturing, an endeavor that analysts believe could take years. TSMC's positive outlook also alleviated investor fears stoked by the significant forecast cuts from chip equipment giant ASML, who were concerned about a slower than expected recovery in semiconductor demand. So far, TSMC's U.S.-listed shares have risen by more than 80% this year, while Nvidia has achieved more than double that increase. Investors are injecting billions of dollars into semiconductor stocks as picks-and-shovels strategies are booming on Wall Street.