US chip stocks rally as TSMC's AI-backed outlook impresses investors
Technology
US chip stocks rally as TSMC's AI-backed outlook impresses investors
(Reuters) - US chip stocks rose before the bell on Thursday after industry bellwether TSMC's strong sales forecast fanned investor optimism about demand for processors used to power artificial intelligence applications.
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 mid-teen percent of its full-year revenue.
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.
Struggling chipmaker Intel's shares were also edging higher. Intel has been expanding its chip fabrication facilities 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 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 twofold, as investors pour billions of dollars into semiconductor stocks amid Wall Street's booming picks-and-shovels trade.
